Conventional vs FHA Loan
Compare conventional and FHA mortgages — credit score requirements, down payment, and mortgage insurance.
Overview
Conventional loans are not government-insured; they have stricter credit and down-payment standards but cheaper long-term costs. FHA loans are insured by the Federal Housing Administration and accept lower credit scores and 3.5% down — but you pay mortgage insurance for the life of the loan.
Choose Conventional Loan when...
Choose conventional if your credit score is 700+ and you can put 5%–20% down — you'll save substantially on lifetime mortgage insurance.
Choose FHA Loan when...
Choose FHA if your credit is 580–680 or your down payment is limited — then plan to refinance to conventional within a few years.
Our Verdict
For buyers who can qualify, conventional is almost always cheaper long-term — PMI cancels at 22% equity, while FHA mortgage insurance lasts the entire loan if you put under 10% down. FHA serves a real purpose for buyers with credit or down-payment limitations, but plan to refinance to conventional once your equity and credit improve.
Frequently Asked Questions
What is the difference between Conventional Loan and FHA Loan?
Conventional loans are not government-insured; they have stricter credit and down-payment standards but cheaper long-term costs. FHA loans are insured by the Federal Housing Administration and accept lower credit scores and 3.5% down — but you pay mortgage insurance for the life of the loan.
When should I choose Conventional Loan over FHA Loan?
Choose conventional if your credit score is 700+ and you can put 5%–20% down — you'll save substantially on lifetime mortgage insurance.
When should I choose FHA Loan over Conventional Loan?
Choose FHA if your credit is 580–680 or your down payment is limited — then plan to refinance to conventional within a few years.
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