FHA vs Conventional: how I help buyers choose
These two programs cover the majority of the loans I close, and the right answer is different for different buyers, sometimes by thousands of dollars. Here's the honest comparison I walk through with clients.
The quick comparison
| FHA | Conventional | |
|---|---|---|
| Minimum down payment | 3.5% | 3% for eligible first time buyers |
| Credit flexibility | More forgiving of lower scores and past events | Rewards stronger credit profiles |
| Mortgage insurance | Upfront fee plus monthly, usually for the life of the loan | Monthly only, and it can drop off once you have enough equity |
| Property types | Primary residences, with property condition standards | Primary, second homes, and investment properties |
When FHA tends to win
FHA is built for real life. Scores in the 500s and 600s, higher debt loads, past credit events, and non traditional situations all get more room to breathe. FHA also pairs smoothly with down payment assistance programs, which is how many of my first time buyers put the whole package together. The tradeoff is mortgage insurance that typically stays for the life of the loan, though refinancing later can address that once your equity and credit have grown.
When Conventional tends to win
If your credit score is strong, Conventional usually costs less over time. The monthly mortgage insurance is priced by credit, so a 740 score buyer often pays much less than they would on FHA, and once you reach enough equity the insurance drops off entirely instead of following the loan forever. Conventional is also the path for second homes and investment properties, which FHA doesn't do.
The part the internet gets wrong
Buyers often arrive convinced one program is "better." Neither is. I've moved buyers from FHA to Conventional and saved them money, and I've moved buyers the other way for the same reason. The only way to know is to price your actual scenario both ways, which takes me minutes once I have your basics.
One more option: VA and USDA both offer up to 100% financing for eligible buyers, and for those who fit, they often beat both FHA and Conventional. Never assume you don't fit until we've checked.
Price your scenario both ways
Send me the basics and I'll show you the side by side for your actual numbers, not a generic chart.