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

December 8th, 2025

Shopping for a mortgage can feel like picking between two mystery boxes. FHA? Conventional? Which one is the smarter move? Don’t worry — we’ll keep it simple, break down the differences, and even throw in some tools so you can see which option fits your budget best.

What’s the Big Difference?

FHA Loan: Backed by the Federal Housing Administration, designed to help more people become homeowners (especially if your credit isn’t perfect or you don’t have a huge down payment).
Conventional Loan: Not government-backed, but often cheaper long-term if you’ve got solid credit and a decent down payment.

Think of FHA as the “supportive friend who helps you get started,” and Conventional as the “classic choice for when you’ve got your ducks (and dollars) in a row.”

FHA Loan Basics

✅ Down payments as low as 3.5%

✅ Easier credit approval (scores as low as 580 can qualify)‍

✅ Great for first-time buyers or folks with limited savings

⚠️ You’ll pay mortgage insurance (MIP) for the life of the loan (unless you refinance)

⚠️ Property must meet stricter appraisal standards

👉 Use our Down Payment Calculator to see how far your savings could take you with FHA.

Conventional Loan Basics

✅ Down payments as low as 3% (though 5–20% is more common)

✅ No mortgage insurance once you reach 20% equity‍

✅ Flexible options for loan length (15-year, 30-year, etc.)

⚠️ Higher credit score needed (typically 620+)

⚠️ Stricter income and debt requirements

👉 Try our Affordability Calculator to see what a Conventional loan might look like for your budget.

Side-by-Side Snapshot

Feature	FHA Loan	Conventional Loan
Minimum Down Payment	3.5%	3% (with good credit)
Credit Score Flexibility	580+	620+
Mortgage Insurance	Required for life of loan	Can drop at 20% equity
Best For	First-time buyers, lower credit, small savings	Buyers with good credit, long-term savings

How to Decide

Ask yourself these three questions:

How’s my credit?
- Under 620 → FHA might be your friend.
- 700+ → Conventional could save you money long-term.
How much do I have saved?
- Tight budget → FHA works with lower down payments.
- Solid savings → Conventional gives you more flexibility.
How long am I planning to stay in the home?
- Short-term → FHA is a great starter option.
- Long-term → Conventional may save you more over time.

The Bottom Line

There’s no one-size-fits-all. FHA can open the door to homeownership sooner, while Conventional can save you more over the years if your financial profile is stronger.

👉 Best next step? Run the numbers.

Use our Loan Comparison Tool to see FHA vs. Conventional side by side.
Or skip the math and Talk to a Loan Officer — we’ll walk you through the options in plain English (no boring financial jargon required).