FHA or conventional? It's one of the most common questions I get, and the honest answer is "it depends." Both are good loans. Which one wins comes down to your specific numbers.
The quick contrast
- FHA — backed by the government, more forgiving on credit, 3.5% minimum down. But it carries mortgage insurance that, on most newer FHA loans, stays for the life of the loan.
- Conventional — as little as 3% down for eligible buyers, and its PMI drops off once you reach about 20% equity. Rewards stronger credit with better pricing.
When FHA tends to win
If your credit is still rebuilding or your score is on the lower side, FHA is often more affordable and easier to qualify for. It's a workhorse for first-time and credit-challenged buyers.
When conventional tends to win
With solid credit and a plan to stay in the home a while, conventional usually costs less over time — mostly because you can shed PMI. It's also typically the better path for condos and for buyers putting more down.
The deciding factor is often your credit score and how long you'll keep the loan. A few points of credit can flip the answer — which is exactly the kind of thing I check before you commit.
Don't forget the other doors
FHA and conventional aren't the only options. VA, USDA, and — for business owners — bank statement programs all may fit. The right move is comparing them against your actual file. Let's run the side-by-side.
This article is general education, not a commitment to lend or an offer of credit. Program availability, terms, rates, and qualification guidelines vary by lender and are subject to change; all loans are subject to underwriting and final approval. Market figures are approximate and change over time. For guidance specific to your situation, reach out directly. Garrett Potz, NMLS #631592 · Affinity Home Lending, Company NMLS #1181151 · Equal Housing Lender.