California buyers regularly weigh FHA against Conventional financing. Both work, but they fit different scenarios. This page walks through the decision: credit profile, down payment, mortgage insurance, DPA stacking, and long-term cost.
At-a-glance guide for which option fits which buyer scenario.
Pros: Lower credit requirement (580+ guideline), 3.5% down, accepts more DPA pairings, assumable to qualified buyers, more flexible debt-to-income
Cons: MIP is for life of loan in most cases, upfront MIP (1.75%) financed into loan, property condition requirements stricter, condo project approval needed
Pros: PMI removable at 20% equity (often before life of loan), no upfront MI premium, more property flexibility (condos, manufactured), investment property allowed
Cons: AUS-driven credit qualifying may not fit credit-rebuilding profiles, slightly higher down for best pricing, harder DPA stack in some scenarios
FHA is my default for first-time California buyers under 700 credit who want to stack CalHFA + SHRA. Conventional wins for buyers with 740+ credit who plan to drop PMI in 2-3 years. The difference can be $50-150/month in MI cost over the long run.
- Ken Clark Jr., Certified Mortgage Advisor, NMLS #225375
The 2026 FHA loan limit varies by California county. Most CA counties are at the floor (~$524,225) but high-cost areas like LA, SF, San Diego, Orange can reach ~$1.2M+ for one-unit. Sacramento County is at the floor.
For most FHA loans originated since 2013, MIP is for the life of the loan and can only be removed by refinancing into a conventional loan once you reach 20% equity. FHA Streamline keeps MIP.
It depends on credit score and PMI rate. Above 720 credit, conventional 3% down with PMI is often cheaper than FHA 3.5% with MIP because PMI removes at 20% equity. Below 680 credit, FHA usually wins.
Yes, once you reach 20% equity and credit qualifies. This is a common path for buyers who started FHA and want to drop MIP.
Both. CalHFA has FHA-paired and Conventional-paired first mortgage options. The 2nd-mortgage DPA (CalHome, PLHA) attaches to either. Credit requirements: 640 for CalHFA FHA, 680 for CalHFA Conventional.
20 minutes on the phone, no pressure. Walk away with a clear picture of your real options.
Disclaimer: This page is for educational purposes only and is not a commitment to lend or guarantee of approval. Loan programs, rates, terms, eligibility, and program availability are subject to change and depend on credit, income, assets, property, occupancy, location, and underwriting. Not all borrowers will qualify. Individual results vary. Equal Housing Opportunity. PRMG Mortgage. NMLS #75243. Ken Clark Jr. NMLS #225375. Licensed in 49 states, excluding New York.