FHA loans and conventional loans are the two most common mortgage types for homebuyers in Bakersfield. Understanding the differences can save you thousands of dollars and make the approval process much smoother.
What is an FHA Loan?
FHA loans are backed by the Federal Housing Administration and allow buyers to purchase with as little as 3.5% down and a credit score of 580 or higher. They're popular with first-time buyers because of these flexible requirements. The government backing means lenders can approve borrowers who wouldn't qualify for conventional financing.
What is a Conventional Loan?
Conventional loans aren't government-backed — they're funded by private lenders and conform to Fannie Mae and Freddie Mac guidelines. They require a minimum 3% down (with certain programs) and typically need a 620+ credit score. With strong credit, conventional loans often offer better rates and lower long-term costs.
Key Differences to Know
The biggest differences come down to mortgage insurance, loan limits, and property requirements. FHA requires Mortgage Insurance Premium (MIP) for the life of the loan when you put less than 10% down. With conventional, Private Mortgage Insurance (PMI) is removable once you reach 20% equity — which can save you hundreds per month over time.
FHA also has stricter property condition requirements. If the home needs significant repairs, it may not pass the FHA appraisal, which can complicate deals on fixer-uppers.
Which Should You Choose?
If your credit score is between 580 and 679 and you have minimal savings, FHA is likely your best path to homeownership. If your credit score is 700 or higher and you have 5% or more to put down, conventional often provides better long-term value due to the removable PMI and potentially lower rates.
The honest answer is that it depends on your specific numbers — credit, income, down payment, and the home's purchase price. As a mortgage broker, Dan can run both scenarios side by side so you can see the real difference in monthly payment and total cost before you decide.
Have questions about FHA vs Conventional?
Call Dan at (661) 342-9381 — he'll run the numbers for your specific situation in minutes.
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Dan Ardis has 20+ years of mortgage experience, including as a Senior Specialty Underwriter. He serves Bakersfield families and clients across 49 states through Barrett Financial Group.