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in Exeter, CA
Most Exeter buyers choose between conventional and FHA financing. Both get you into a home, but the costs and requirements differ sharply.
Conventional loans reward strong credit with lower costs. FHA loans prioritize accessibility with easier qualification.
Conventional loans require 3-20% down depending on your lender program. You'll need a 620 credit score minimum, though 680+ gets better pricing.
You pay mortgage insurance only if you put down less than 20%. That insurance drops off automatically once you hit 78% loan-to-value through payments or appreciation.
Debt-to-income ratios typically max out at 45%, sometimes 50% with strong credit. Rates vary by borrower profile and market conditions.
FHA loans allow 3.5% down with a 580 credit score. You can qualify with 500-579 credit if you put down 10%.
Every FHA loan includes two mortgage insurance charges. You pay 1.75% upfront at closing, then monthly premiums for the loan's life on purchases with 3.5% down.
FHA accepts higher debt ratios, often up to 50% with compensating factors. Income standards are more forgiving for self-employed borrowers.
Credit makes the biggest impact. FHA accepts 580 scores; conventional needs 620 minimum. But that 40-point gap changes your monthly payment significantly.
Mortgage insurance costs structure differently. Conventional MI drops off. FHA's doesn't unless you refinance or put down 10%+ initially.
Down payment requirements look similar at 3-3.5%. But FHA's 1.75% upfront premium adds roughly $3,500 to closing costs on a $200,000 loan.
Choose FHA if your credit sits between 580-680 or your debt ratio exceeds 45%. The higher insurance costs beat getting denied or paying conventional's risk-based pricing hits.
Go conventional if you have 680+ credit and can manage 5%+ down. You'll save thousands over the loan term by avoiding permanent mortgage insurance.
Plan to refinance an FHA loan once you build equity and improve credit. Many Exeter buyers start with FHA accessibility, then move to conventional economics within 2-3 years.
Yes on conventional with 20% down. FHA requires insurance regardless of down payment size unless you put down 10%+ and wait 11 years.
Both take 25-35 days typically. FHA may process slightly faster due to streamlined underwriting, but timelines depend more on documentation completeness.
Absolutely. A 620 score costs 1-2% more in rate than 740+ on conventional. FHA pricing tiers matter less but still improve above 680.
Conventional has no property age limits. FHA requires properties meet minimum standards, which can complicate purchases of fixer-uppers needing immediate repairs.
Both loans work but FHA tends to accept messier income documentation. Conventional wants two years of clean tax returns with stable trends.