FHA vs Conventional Loan

Introduction

FHA vs conventional is a common comparison. FHA offers lower down payment and more flexible credit but often has mortgage insurance for the life of the loan. Conventional may require more down but allows PMI removal at 80% LTV. See What Is an FHA Loan, What Is a Conventional Loan, and What Is PMI.

Frequently Asked Questions

What is the main difference?

FHA is government-backed with lower down payment (3.5%) and more flexible credit; conventional is not government-backed, often requires 3%–20% down, and PMI can be removed at 80% LTV.

Which has lower down payment?

FHA allows 3.5% down with a 580+ credit score. Conventional can go as low as 3% for qualified buyers but often requires stronger credit.

Which has cheaper mortgage insurance?

Conventional PMI can be removed at 80% LTV. FHA MIP often lasts for the life of the loan on high-LTV loans, which can make FHA more expensive long-term.

When is FHA better?

FHA can be better for first-time buyers with lower credit or limited down payment. Conventional may be better if you have strong credit and can put 5%+ down.