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in Santa Rosa, CA
Santa Rosa buyers often face a choice between conventional and FHA financing. Both work for properties across Sonoma County, but they have different requirements and costs.
The right loan depends on your down payment savings and credit profile. We'll break down the real differences so you can choose the option that actually gets you approved.
Conventional loans require 620+ credit and at least 3% down. You'll pay PMI with less than 20% down, but you can cancel it once you hit 20% equity.
These loans have stricter approval standards than FHA. That means better rates for borrowers with good credit and income documentation. No upfront mortgage insurance premium either.
FHA loans accept 580 credit scores with 3.5% down. You can go as low as 500 credit with 10% down. Much easier approval for buyers with credit challenges.
You'll pay 1.75% upfront mortgage insurance plus monthly MIP for the loan's life in most cases. That's the tradeoff for easier qualification—higher insurance costs that don't drop off.
The credit gap is huge. Conventional needs 620 minimum while FHA accepts 580. That 40-point spread opens doors for buyers who got dinged by medical bills or past credit issues.
Mortgage insurance works completely differently. Conventional PMI drops off when you hit 20% equity. FHA MIP stays for 30 years on most loans, costing you thousands extra over time.
Down payment requirements look similar at 3-3.5%, but FHA's upfront premium adds significant closing costs. On a $600K Santa Rosa home, that's $10,500 due at closing.
Choose FHA if your credit is below 620 or you need the more flexible approval standards. It's the only path forward for many Santa Rosa buyers, especially first-timers rebuilding credit.
Go conventional if you have 620+ credit and stable income. You'll save thousands on insurance over the loan term. Even if you only put 5% down, canceling PMI later beats paying FHA MIP forever.
One exception: if you're putting 10%+ down with good credit, conventional wins every time. Lower rates and removable insurance make it the clear choice for qualified borrowers.
Yes, refinancing to conventional once you hit 20% equity eliminates FHA MIP. Most Santa Rosa borrowers do this within 5-7 years to cut monthly costs.
Conventional typically offers better rates for borrowers with 680+ credit. Below that, FHA rates become competitive despite the insurance costs.
Only if the condo project is FHA-approved. Conventional loans work with any warrantable condo, giving you more property options in Sonoma County.
Both allow gift funds from family. FHA is slightly more flexible about the source and documentation requirements for gift money.
Conventional typically closes 3-5 days faster than FHA. Less appraisal scrutiny and no FHA case number process speeds things up.