FHA vs Conventional Loans
Compare two of the most popular mortgage options and find the best fit for your situation.
GET PRE-APPROVEDQuick Comparison
FHA Loans
3.5% Down Payment
With 580+ credit score
Lower Credit Requirements
Accepts 580+ scores
Higher DTI Allowed
Up to 50% in some cases
Permanent MIP
Cannot be removed (with <10% down)
Upfront MIP Required
1.75% of loan amount
Conventional Loans
Removable PMI
Cancel at 20% equity
No Upfront Insurance
Only monthly PMI if needed
Higher Loan Limits
Up to $766,550 (2024)
Higher Down Payment
Typically 5-20%
Stricter Credit Requirements
620+ minimum, 740+ for best rates
FHA vs Conventional Loans: Key Feature Comparison
Adjust the values below to see how each loan type affects your monthly payment
FHA Loan
Conventional Loan
Conventional saves you $115/month
Detailed Pros & Cons
FHA Loans
Pros:
- Lower down payment (3.5%) makes homeownership more accessible
- More lenient credit requirements (580+ accepted)
- Higher debt-to-income ratios allowed
- Gift funds allowed for down payment and closing costs
- Assumable loans (buyer can take over your rate)
Cons:
- Upfront mortgage insurance premium (1.75% of loan)
- Permanent MIP for loans with less than 10% down
- Property must meet FHA appraisal standards
- Lower loan limits than conventional jumbo loans
- Must be primary residence (no investment properties)
Conventional Loans
Pros:
- PMI can be removed once you reach 20% equity
- No upfront mortgage insurance premium
- Higher loan limits (up to $766,550 in 2024)
- Can be used for investment properties and second homes
- Lower rates for borrowers with excellent credit
Cons:
- Higher down payment typically required (5-20%)
- Stricter credit score requirements (620+ minimum)
- Lower debt-to-income ratios required
- More difficult to qualify with recent credit issues
- PMI required with less than 20% down
Frequently Asked Questions
Which loan has lower down payment requirements?
FHA loans require as little as 3.5% down with a 580+ credit score, while conventional loans typically require 5-20% down.
Can I cancel mortgage insurance?
Conventional PMI can be removed at 20% equity. FHA MIP is permanent for loans with less than 10% down.
Which is better for first-time buyers?
FHA is often better for first-time buyers with limited savings or lower credit scores. Conventional is better if you have good credit and can put down 10-20%.
What credit score do I need?
FHA accepts scores as low as 580 (500 with 10% down). Conventional typically requires 620+ for best rates, 740+ for optimal pricing.
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