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in Mount Shasta, CA
Mount Shasta buyers face a choice that affects their monthly payment, upfront costs, and how quickly they can close. Conventional and FHA loans both work here, but they serve different borrower profiles.
Your credit score and down payment savings determine which path makes sense. Most Mount Shasta buyers I work with qualify for one but not both when we run the numbers.
Conventional loans require 620+ credit and at least 3% down, though you'll pay PMI until you hit 20% equity. These mortgages offer the lowest rates if your credit is strong and eliminate mortgage insurance faster than FHA.
You can use conventional financing on any Mount Shasta property type, from single-family homes to multi-unit investments. The appraisal standards are stricter than FHA, so fixer-uppers sometimes don't qualify.
FHA loans accept 580 credit scores with just 3.5% down, making them the go-to for first-time Mount Shasta buyers. You'll pay both upfront and monthly mortgage insurance for the loan's life in most cases.
The big advantage is qualification flexibility—credit issues that kill conventional approval often pass FHA underwriting. Appraisers are pickier about property condition, so older Mount Shasta homes sometimes need repairs before closing.
Credit drives the split—below 620, FHA is your only choice. Between 620-740, FHA costs less upfront but more monthly due to mortgage insurance that never drops off.
Conventional wins for buyers with 10%+ down and 740+ credit because you'll pay lower rates and ditch PMI at 20% equity. FHA makes sense when you need maximum approval flexibility or have under 5% saved.
Choose conventional if your credit is 680+ and you have 5-10% down—you'll save thousands over the loan term. The PMI drops off, and your rate will beat FHA by 0.25-0.50% in most cases.
Go FHA if you're under 640 credit, have minimal savings, or carry higher debt ratios. The upfront and monthly insurance costs are worth it to get approved now versus waiting years to build conventional-worthy credit.
Yes, refinance to conventional once you hit 20% equity and 620+ credit. This eliminates the monthly mortgage insurance FHA charges for the loan's life.
Both take 30-45 days typically. FHA appraisals sometimes require repairs that delay closing, while conventional appraisals are less strict on property condition.
Conventional rates run 0.25-0.50% lower for borrowers with 740+ credit. Below 680 credit, FHA rates often match or beat conventional pricing.
Conventional allows more property issues. FHA requires repairs for safety and livability problems before closing, which kills some Mount Shasta fixer deals.
FHA wins at 3.5% down versus 3% conventional minimum. But conventional lets you avoid upfront mortgage insurance that FHA charges at 1.75% of the loan amount.