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in Rohnert Park, CA
Rohnert Park buyers often face a simple question: conventional or FHA? The difference costs thousands over the life of your loan.
Both get you into a house. But they play by different rules on down payments, mortgage insurance, and what sellers expect.
Conventional loans aren't backed by any government agency. You need stronger credit and more cash up front, but you drop mortgage insurance once you hit 20% equity.
Most Rohnert Park buyers use conventional financing. It's cleaner in multiple-offer situations and gives you more negotiating leverage with sellers.
Minimum down payment is 3% for first-time buyers, 5% otherwise. Credit scores below 620 make approval tough. Mortgage insurance falls off automatically at 78% loan-to-value.
FHA loans are government-insured through the Federal Housing Administration. You can get in with 3.5% down and credit scores as low as 580.
The catch is mortgage insurance. You pay an upfront premium plus monthly premiums that last the entire loan term if you put down less than 10%.
FHA works well for Rohnert Park buyers with limited savings or credit issues. But sellers sometimes worry about appraisal requirements and financing delays.
Credit score matters more with conventional loans. FHA accepts 580, while most conventional lenders want 620 or higher for competitive rates.
Mortgage insurance is the big cost difference. FHA charges 1.75% upfront plus annual premiums that never go away. Conventional PMI drops off once you reach 20% equity.
Sellers in competitive Rohnert Park neighborhoods often prefer conventional buyers. FHA appraisals scrutinize property conditions more closely, which can kill deals on older homes.
Choose FHA if your credit score is below 620 or you can barely cover a 3.5% down payment. The insurance costs sting, but it gets you in the door.
Go conventional if you have 620+ credit and can handle 3-5% down. You'll save thousands on insurance and get taken more seriously by Rohnert Park sellers.
Most borrowers refinance out of FHA once they build equity and improve their credit. Start there if you must, but plan your exit from day one.
Yes, refinancing to conventional is common once you hit 20% equity and 620+ credit. You eliminate monthly mortgage insurance completely.
In competitive situations, yes. Conventional offers close more reliably because FHA appraisals flag minor property issues that can delay or kill deals.
Conventional rates run slightly lower for borrowers with strong credit. FHA rates are competitive but the insurance costs erase any advantage.
You pay 1.75% upfront plus 0.55-0.85% annually based on loan amount and down payment. On a $500k loan, that's about $300-350 monthly.
Conventional allows 3% down for first-time buyers through specific programs. FHA requires 3.5% minimum, no exceptions.