Federal Housing Administration (FHA) loans are government-backed mortgages designed to help first-ti
Conventional loans are not backed by government agencies and typically offer the most flexibility fo
FHA vs Conventional Loans: Which Is Better for You?
Compare FHA and conventional loans side by side. Learn about credit score requirements, down payments, mortgage insurance, and which loan fits your situation best.
At a Glance
Quick comparison of key requirements
Feature-by-Feature Comparison
See how FHA Loans and Conventional Loans stack up
| Feature | FHA Loans | Conventional Loans |
|---|---|---|
| Min. Credit Score | 580 (3.5% down) | 620+ |
| Down Payment | 3.5% | 3-20% |
| Mortgage Insurance | Required (MIP) | Required if <20% down (PMI) |
| Loan Limits | $498,257 (2024) | $766,550 (2024) |
| Property Standards | Strict (FHA appraisal) | Standard appraisal |
| DTI Ratio | Up to 57% | Up to 50% |
| Occupancy | Primary residence only | Primary, second home, investment |
| MI Cancellation | Lifetime (most cases) | Removable at 80% LTV |
Which Loan Is Right for You?
Each loan type has ideal scenarios
The Bottom Line
FHA loans are ideal for first-time buyers with lower credit scores or limited down payments. Conventional loans offer more flexibility and lower long-term costs for borrowers with stronger credit profiles. Many borrowers start with FHA and refinance to conventional once they build equity.
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Frequently Asked Questions
Common questions about FHA Loans vs Conventional Loans
Frequently Asked Questions
Yes, you can refinance from an FHA loan to a conventional loan once you have at least 20% equity and meet conventional credit requirements. This eliminates lifetime mortgage insurance.
It depends on your situation. FHA may have lower payments upfront due to lower down payment, but conventional can be cheaper long-term since PMI can be removed.
No, FHA loans are only for primary residences. If you want to buy an investment property, you will need a conventional or specialty loan.
This comparison is for informational purposes only and does not constitute financial advice. Rates, terms, and program availability are subject to change without notice and may vary based on creditworthiness, property type, loan amount, and other factors. Contact NMHL for current rates and personalized loan options. NMHL NMLS# 2557591. Equal Housing Lender.