Short Answer
Conventional loans are not insured by the government and typically require a higher credit score of 620 or above with 3% to 5% down. FHA loans are insured by the Federal Housing Administration and require a minimum credit score of 580 with 3.5% down. FHA loans are easier to qualify for but require mortgage insurance for the life of the loan if you put less than 10% down. Conventional loans allow you to cancel PMI once you reach 20% equity.
The choice between conventional and FHA often comes down to your credit score and down payment. Conventional loans offer more flexibility in terms and allow you to cancel PMI once you have 20% equity. They also have higher loan limits and can be used for a wider range of property types. Conventional loans require private mortgage insurance when your down payment is less than 20%, but this can be canceled once you reach 20% equity. FHA loans have more lenient credit requirements and allow a 3.5% down payment with a credit score of 580. FHA loans require an upfront mortgage insurance premium of 1.75% of the loan amount and annual MIP that varies based on loan amount and down payment. If you put less than 10% down on an FHA loan, the MIP remains for the life of the loan. For many first-time buyers with limited savings or lower credit scores, FHA is the better choice. For buyers with stronger credit and savings, conventional loans offer long-term savings.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
I have helped buyers go both routes. If you have strong credit and a decent down payment, conventional is usually the better long-term value. If you have a lower credit score or limited down payment, FHA is often the way in. The important thing is getting connected with a lender who will honestly evaluate your situation and recommend the right program. I can help with that. Let us talk.
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