Conventional Loan vs. FHA Loan
Conventional loans aren't backed by a government agency and typically require stronger credit, while FHA loans are government-insured and allow lower credit scores and down payments in exchange for mandatory mortgage insurance.
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Conventional Loan
A mortgage not backed by a government agency, typically requiring stronger credit but offering more flexibility on mortgage insurance once sufficient equity is reached.
- Private mortgage insurance can typically be removed once enough equity is built
- Can be used for primary homes, second homes, or investment properties
- No upfront mortgage insurance premium like FHA requires
- Generally requires a higher credit score to qualify for the best terms
- Down payment requirements can be higher for certain property types
FHA Loan
A government-insured loan program designed to expand access to homeownership, allowing lower credit scores and down payments in exchange for mandatory mortgage insurance.
- Lower minimum credit score requirements in many cases
- Lower minimum down payment for qualifying borrowers
- More flexible on certain debt-to-income considerations
- Requires both an upfront and ongoing mortgage insurance premium
- Mortgage insurance often can't be removed without refinancing
- Loan limits and property condition standards apply
Which one makes sense for you?
Conventional loans often cost less over time for borrowers with strong credit and a meaningful down payment, since mortgage insurance can eventually be removed. FHA loans can be a valuable path to homeownership for borrowers with lower credit scores or smaller down payments, though the mandatory mortgage insurance adds to the long-term cost.
Key cost factors.
- Your current credit score and down payment savings
- Whether the property meets FHA condition standards
- How long you plan to stay in the home
- Total cost comparison including mortgage insurance over time
Before you decide.
- What would my total monthly payment, including mortgage insurance, look like under each option?
- Does this property meet FHA appraisal and condition standards?
- How long would FHA mortgage insurance stay on the loan given my down payment?
Frequently asked questions.
Can I refinance from FHA to conventional later?
Yes — many borrowers refinance from an FHA loan into a conventional loan once they've built enough equity and credit strength, in order to remove mandatory mortgage insurance.
All figures on this page are illustrative examples for general education, not quotes, appraisals, or guarantees of actual pricing. Actual costs vary by provider, location, project scope, and market conditions — always get a specific quote before making a purchasing decision.
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