FHA vs. Conventional Loans

Both FHA and Conventional loans are great, but there are some key differences you should consider.

Buying your first home? One of the biggest decisions you'll make is choosing between an FHA loan and a conventional loan. Both are popular options for first-time home buyers, but they offer different benefits depending on your credit, income, and down payment savings.

Here’s a simple, easy to read guide to help you decide.

✅ Key Differences between FHA and Conventional Loans

FHA Loan

✔ Government-backed by the Federal Housing Administration

✔ Ideal for lower credit scores

✔ Minimum 3.5% down payment (with 580+ credit)

Conventional Loan

✔ Offered by private lenders (no government insurance)

✔ Better for buyers with stronger credit

✔ Minimum 3% down payment

💳 Minimum Credit Score

• FHA Loan: 580+ (with 3.5% down), or 500 with 10% down

• Conventional Loan: 620+ minimum, better rates with 700+

💡 If your credit score is under 620, you may need to increase your credit score.

💰 Down Payment Options

• FHA Loans: As low as 3.5% down

• Conventional Loans: As low as 3% (depending on lender)

✅ Both options allow gift funds for the down payment.

🏦 Mortgage Insurance

FHA Loans:

• Upfront and monthly MIP

• Usually lasts for the life of the loan

Conventional Loans:

• Monthly PMI if down payment is less than 20%

• Can be removed once you hit 20% equity

🏠 Property Requirements

• FHA: Requires stricter home appraisal standards

• Conventional: More flexible on condition and type

🛠️ Buying a fixer-upper? Conventional might be better.

🧭 Quick Comparison

Feature	FHA Loan	Conventional Loan
Down Payment	3.5% minimum	3% minimum
Credit Score	580+	620+
Mortgage Insurance	MIP (may last for life)	PMI (can be removed)
Property Standards	Strict appraisal rules	Flexible
Best For	First-time, lower credit buyers	Strong credit, long-term savings

How I Can Help You

When it comes time to purchase a home, I want to help you! Hopefully articles like this give you good information and a better understanding of the mortgage world but let me use my experience and expertise to help you with your particular situation.

I tell my clients and referral partners that a mortgage transaction starts with a simple conversation. Let’s talk about your financial situation, budget, and goals so that I can help you determine the best solution for you. During a 10-minute informal conversation, we can get you on the right path as it relates to a home purchase or mortgage refinance.