Conventional Loan vs FHA In California is a post from: FHA,VA and Conventional Home Loans in all 50 States

As of late conventional lending vs FHA has become a lot more attractive in California.  Mortgage insurance companies have become more lenient with their guidelines and now 5% down with a conventional loan is an excellent option in California.

	FHA 3.5% Down	Conventional 5% Down
Up Front Mortgage Insurance	1% of loan amount	NONE
Monthly Mortgage	1.15%	.7% (>700 credit) .9% (620-699 credit)
Max debt-to-income ratio	56.9%	45%
Include non-borrowing spouses debt	Yes	No
Wait after short sale	3	3
Wait after foreclosure	3	7
Wait after bankruptcy	2	2

So as you can see the gap is narrowing comparing conventional home loans vs. FHA home loans in California.   The benefits of FHA home loans is the interest rate is not as credit score driven and FHA allows as much higher debt-to-income ratio allowing you to qualify for a higher purchase price.  So if you have a less than a 680 credit score and carry a lot of debt, FHA may be the better way to go.  FHA can also carry a slightly lower 30 year fixed interest rate than 5% down conventional loans in California, even for those with the best credit scores.   But since conventional 5% down loans have NO up front mortgage insurance and a lower monthly mortgage insurance, this can make conventional a better option for those with the higher credit scores.  Mortgage insurance can be tax deductible depending on your income, please talk to your tax preparer for more details.

Also, a nice feature of a convention loan vs FHA is that conventional loan does not need to include the monthly debt obligations of a non-borrowing spouse.  Where in California, FHA loans require a spouse’s debt to be counted even if they are not going to be a co-borrower on the loan.  So if one spouse has a lot of auto loans, credit cards, student loans, collections, past dues accounts, etc…, but the borrowing spouse does not, conventional can be a better choice than FHA.

So I hope this helps you understand the differences between 5% down conventional and 3.5% down FHA loans in California.  Please don’t hesitate to email me at homeloan8@gmail.com or call at 858-922-7899 if you have any questions.

Below are some up-to-date advantages of FHA & conventional loans in California:

• We lend in every corner of the state of California from San Diego, Orange County, Los Angeles, San Jose, San Francisco, Sacramento, Fresno, Anaheim, Santa Ana, Bakersfield and on and on.
• You can get a FHA loan three years after a short sale or foreclosure
• You can get a FHA loan two years after  a chapter 7 bankruptcy
• With 20% down you can get a conventional loan two years after a short sale

Regards,

Rob Chomentowski

Sr. Loan Officer

858-922-7899

homeloan8@gmail.com

 

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.