FHA vs. Conventional Loans
FHA and conventional loans are the two most popular mortgage options in California. Choosing the right one can save you tens of thousands of dollars over the life of your loan.
| Feature | FHA Loans | Conventional Loans |
|---|---|---|
| Minimum Down Payment | 3.5% with 580+ credit | 3% first-time, 5% repeat |
| Minimum Credit Score | 580 (500 with 10% down) | 620 minimum |
| Mortgage Insurance | 1.75% upfront + 0.55%/yr for life | PMI 0.2–1.5%/yr, cancels at 80% LTV |
| Loan Limits (CA) | $1,209,750 high-cost | $1,209,750 conforming |
| Property Types | Primary residence only | Primary, second home, investment |
| Seller Concessions | Up to 6% | Up to 3–9% depending on down payment |
| DTI Limit | Up to 50% with compensating factors | Up to 43–45% |
| Appraisal Requirements | Stricter property condition rules | Standard appraisal |
| Gift Funds | 100% of down payment can be gift | Allowed with documentation |
| Assumable | Yes | No |
Best For: FHA Loans
Buyers with credit scores below 700, limited savings, or recent credit events. FHA is more forgiving on qualification.
Learn More About FHA Loans →Best For: Conventional Loans
Buyers with 700+ credit who want removable PMI, lower total cost, and the option to buy investment properties.
Learn More About Conventional Loans →The Bottom Line
In California, conventional loans are usually the better long-term value for buyers with 700+ credit because PMI cancels once you reach 20% equity. FHA wins for buyers with lower credit or minimal savings — and the entire down payment can come from gift funds. Save Financial runs both scenarios for every client to show the exact dollar difference.
Not Sure Which Is Right for You?
Save Financial runs side-by-side comparisons for every client — showing you the exact dollar difference between programs for your specific situation. No guessing, just math. Call (888) 703-1840 or get a free quote online.
Ask a Mortgage Expert
Free expert guidance from a licensed California mortgage broker. No obligation.
🔒 Your information is secure and will never be sold.
Expert Contributor
Mike Baasti, Licensed Mortgage Broker
Expert contributor to Mortgage Guide California. Licensed mortgage broker (Sponsored by Save Financial, Inc. (NMLS #377740), DRE #01875766) and founder of Save Financial, Inc. in Newport Beach, CA. 20+ years originating conventional, FHA, VA, jumbo, and specialty loans across California.
Get Your Free Loan Comparison
Save Financial analyzes all available programs and shows you the best option — with exact numbers, not guesses.
Last updated: July 2026. Sources: FHFA, HUD, VA, CalHFA, CFPB, California DRE, California Association of Realtors. All loans subject to credit approval. Rates subject to change.