Recently, it has become common to see families looking for their first home in Palm Springs debating between FHA and conventional loans. The answer often depends on how much they have saved for a down payment and their credit score, but it's not uncommon to see decisions made without fully understanding the differences between the two options.

The median home price in Palm Springs is $679,630 (Redfin, as of June 2026, down 1.5 percent from the previous year). Zillow's self-estimated price index shows a value of $619,612, also reflecting a downward trend compared to the previous year. Both indicators suggest that the market is moving within the $600,000 to $700,000 range.

In this price range, conventional loans and FHA loans create a competitive landscape. Riverside County, where Palm Springs is located, is not designated as a high-cost area by the FHFA, so the 2026 conforming loan limit of $832,750 applies. This means that most listings in the area are unlikely to require jumbo loans. The basic conditions for both types of loans are as follows:

• Conventional Loan - Down payment of 3 to 20 percent, recommended credit score of 620 or higher, PMI applies if down payment is less than 20 percent, can be canceled if equity exceeds 20 percent
• FHA Loan - If credit score is 580 or higher, down payment is 3.5 percent; for scores between 500 and 579, a 10 percent down payment is required; if down payment is less than 10 percent, MIP will be maintained throughout the loan term

If your credit score is above 680 and you can prepare a down payment close to 20 percent, a conventional loan appears to be advantageous without PMI. Conversely, if your credit score is still in the low 600s or your initial funds are tight, opting for an FHA loan to lower the entry barrier seems like a more realistic choice.

When determining the size of the down payment, it's beneficial to consider not just how much you can pay, but also whether increasing the down payment to avoid PMI is more advantageous than keeping that money in hand. During times of high interest rates, the effect of reducing the loan principal may feel more significant than the cost of PMI, so this calculation can vary based on personal circumstances.

Many families relocating to Palm Springs after retirement from other states should also budget for the differences in property tax rates and fire insurance conditions compared to their previous residences in California. In areas where community facilities or HOA regulations are scrutinized more than school districts, it's wise to calculate HOA monthly fees during the loan consultation phase.

If it takes time to improve your credit score, entering with an FHA loan first and then refinancing to a conventional loan after a few years when your credit score improves is a strategy worth considering. However, refinancing will only be beneficial if the interest rate at that time is lower than when the original loan was taken out, so this strategy should be evaluated alongside interest rate trends. Keep in mind that closing costs will arise again during the refinancing process, so it's advisable to calculate the break-even point compared to the interest savings.

Within Riverside County, which is not far from Palm Springs, there is an Air Reserve Base, indicating a significant veteran population in the county. For families with military experience, VA loans that require no down payment are also worth considering. The city of Palm Springs itself does not fall under the USDA loan designation for rural areas due to its population size, and whether the nearby desert areas qualify for USDA loans needs to be verified by address.

Many people also consider Palm Springs for a second home or investment purposes, but it's important to note that investment properties have stricter conventional loan criteria than primary residences, and rental demand can fluctuate seasonally. This article does not constitute investment or legal advice, and it is recommended to consult with a loan officer and experts before finalizing any contracts. Tax and insurance conditions can vary by county, so it's safest to double-check right before signing a contract.