FHA vs Conventional: Which Loan Is Right for You?
The real trade-offs between FHA and conventional loans — down payment, credit, and the mortgage insurance that decides your long-term cost.
The short version
FHA loans are easier to qualify for — lower credit scores and 3.5% down — but carry mortgage insurance for most of the loan’s life. Conventional loans need slightly better credit and often 3–5% down, but their PMI drops off once you reach 20% equity, which usually makes them cheaper over time.
Down payment and credit
FHA allows 3.5% down with a credit score around 580, and can work with scores as low as 500 at 10% down. Conventional programs commonly start at 3–5% down and reward stronger credit with better rates. If your credit and savings are solid, conventional is often the lower long-term cost.
Mortgage insurance is the deciding factor
On FHA, mortgage insurance premium (MIP) usually stays for the life of the loan unless you put 10% down or later refinance. On conventional, PMI can be removed at 20% equity and terminates automatically at 22%. Over several years that difference can be worth thousands.
How to choose
If your credit is under ~680 or your down payment is very tight, FHA may get you in the door. If you have decent credit and can reach 5%+ down, run both — we’ll compare the true monthly cost, not just the rate, before you decide.
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Educational information only — not legal, tax, or lending advice. Figures are typical ranges, not quotes or approvals. Confirm specifics with a licensed lender or attorney.
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