FHA and conventional are the two most common loan types for Antelope Valley home buyers — and choosing between them affects your monthly payment, upfront costs, and long-term equity. Neither is universally better. The right answer depends on your credit score, down payment, and how long you plan to stay in the home.
Side-by-Side Comparison
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Minimum Credit Score | 580 (3.5% down) | 620 |
| Minimum Down Payment | 3.5% | 3% (some programs) |
| Mortgage Insurance | MIP for life of loan (if <10% down) | PMI until 80% LTV |
| Upfront Insurance | 1.75% UFMIP (rolled in) | None |
| Annual Insurance | ~0.55% of loan | 0.2%–1.5% (credit-dependent) |
| Loan Limit (LA County 2026) | ~$1,209,750 | ~$1,089,300 conforming |
| Property Condition | Stricter MPR requirements | More flexible |
| Gift Funds Allowed | 100% of down payment | With conditions if <20% down |
When FHA Makes More Sense
- Your credit score is 580–619 — FHA accepts it, most conventional lenders don't
- You have limited savings and need 3.5% down rather than 5%
- The entire down payment is a family gift — FHA allows this without conditions
- You're buying a CalHFA-assisted program home (CalHFA first mortgages are often FHA-backed)
- You expect to stay 7+ years — FHA MIP cost averages out over a long hold period
When Conventional Makes More Sense
- Your credit score is 740+ — you'll get the best conventional rates, beating FHA's MIP penalty
- You can put 20% down — no PMI at all, making conventional significantly cheaper
- You plan to sell or refinance within 5 years — eliminating MIP faster matters
- The property has cosmetic issues that could fail FHA's MPR inspection
- You're buying a condo — FHA condo approval is harder to find than conventional approval
The Mortgage Insurance Problem — And How to Escape It
FHA MIP is the most significant FHA disadvantage: on loans with less than 10% down, MIP runs for the entire life of the loan. On a $440,000 FHA loan, that's roughly $202/month for 30 years — $72,720 total — even after you've built 80% equity. The only exit is refinancing into a conventional loan once you have 20%+ equity. Conventional PMI, by contrast, cancels automatically when you reach 80% LTV, or you can request removal at 80% and get it at 78%.
Can You Switch from FHA to Conventional?
Yes — and it often makes financial sense. Once you have 20% equity (through appreciation or pay-down), refinancing into a conventional loan eliminates MIP. In the Antelope Valley, where home values have appreciated 8–10% annually, some buyers reach 20% equity in 3–4 years. We track this for past clients and alert them when refinancing makes sense.
Frequently Asked Questions
What is the FHA loan limit in Los Angeles County for 2026?+
The 2026 FHA loan limit for Los Angeles County is approximately $1,209,750 for a single-family home (high-cost area). This is well above the typical Palmdale/Lancaster price range, so the limit is not a constraint for most buyers.
How much is FHA mortgage insurance per month?+
FHA MIP has two parts: an upfront premium of 1.75% (typically rolled into the loan) and an annual premium of approximately 0.55% for most borrowers. On a $440,000 loan, the annual MIP is $2,420, or $202/month added to your payment.
Can I avoid PMI on a conventional loan with less than 20% down?+
Not entirely — but you can manage it. Options include: lender-paid PMI (you take a higher rate instead), a piggyback second loan (80-10-10 structure), or simply waiting until you reach 20% equity. Lender-paid PMI can make sense if you plan to sell or refinance within a few years.
Which loan is better for a first-time buyer in California?+
It depends on your credit score and savings. With a 580–619 score or very limited savings: FHA. With 620+ and 5%+ saved: run both scenarios with your lender — the monthly payment difference often favors conventional. With 740+ credit: conventional almost always wins long-term.
Questions? We're Here.
Talk to Elizabeth — Hablamos Español
Bilingual real estate agent serving Palmdale, Lancaster, Quartz Hill, and all of Antelope Valley. No pressure, no jargon.