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

FHA and conventional loans are the two most common paths to homeownership, and the right choice depends on your credit, savings, and long-term plans.

FHA loans at a glance

• Down payments as low as 3.5% with a 580+ credit score.
• More forgiving credit requirements.
• Mortgage insurance premiums (MIP) that often last the life of the loan with low down payments.

Conventional loans at a glance

• Down payments as low as 3% for qualified buyers, but 20% avoids PMI entirely.
• Typically require a higher credit score for the best rates.
• PMI can be cancelled once you reach about 20% equity — unlike FHA MIP.

How to decide

If your credit is still improving or your savings are limited, an FHA loan can get you into a home sooner. If you have strong credit and can put down more, a conventional loan often costs less over time because you can shed mortgage insurance. Many FHA borrowers refinance into a conventional loan once they build equity. Model both with our FHA calculator and the standard mortgage calculator to compare the monthly payment and lifetime cost.