FHA vs. Conventional Loans: Which Is Right for You?

For most buyers, the choice comes down to two options: an FHA loan backed by the government, or a conventional loan that isn't. Each wins in different situations.

FHA loans: built for lower credit and down payments

FHA loans are insured by the Federal Housing Administration and designed to make homeownership accessible.

• Down payments as low as 3.5% with a 580+ score.
• More forgiving of past credit issues.
• Mortgage insurance (MIP) is required regardless of down payment, often for the life of the loan.

Conventional loans: better long-term cost with stronger credit

Conventional loans aren't government-backed and follow Fannie Mae / Freddie Mac guidelines.

• Down payments from 3% for qualified buyers.
• PMI is required under 20% down — but it drops off once you reach 20% equity.
• Usually cheaper over time if your credit is strong.

Which one wins?

If your credit is still recovering or your down payment is small, FHA often opens the door. If your credit is solid, a conventional loan usually costs less over the life of the loan because the mortgage insurance eventually disappears. The honest answer for most buyers: it depends on your numbers — and the only way to know is to compare real offers.

The shortcut: let brokers run both

A good broker can price both options side by side for your exact situation. Submit one request and let several compete — then pick the loan, and the person, that fit you best.