The Most Common Question I Get
"Should I go FHA or Conventional?" I probably hear this five times a week. And honestly, the answer is always the same: it depends. Not a cop-out — it genuinely depends on your credit score, your down payment, and how long you plan to keep the loan. Let me break it down so you can make an informed decision.
The Quick Comparison
Credit Score Requirements
- FHA: Minimum 580 with 3.5% down. Scores between 500-579 can qualify with 10% down.
- Conventional: Minimum 620, but you'll get the best rates at 740+.
Down Payment
- FHA: 3.5% minimum
- Conventional: As low as 3% for first-time buyers, 5% for repeat buyers
Mortgage Insurance
- FHA: Upfront mortgage insurance premium (1.75% of loan amount, usually rolled into the loan) plus monthly mortgage insurance for the life of the loan.
- Conventional: PMI required if you put less than 20% down, but it drops off automatically once you reach 20% equity.
Loan Limits (2026)
- FHA: Varies by county. In most areas, the limit covers homes up to the mid-$500K range — higher in high-cost areas like Southern California.
- Conventional: Conforming limit is higher and covers most purchase prices in the majority of markets.
When FHA Is the Better Play
FHA makes sense when:
- Your credit score is between 580 and 680
- You've had a credit event (bankruptcy, foreclosure) and need more flexible guidelines
- Your DTI is on the higher side — FHA allows up to 57% in some cases
- You're planning to refinance within a few years once your credit improves
The downside? That lifetime mortgage insurance. On a $350,000 loan, that's roughly $200-250/month extra that never goes away (unless you refinance into a conventional loan later).
When Conventional Wins
Conventional is typically better when:
- Your credit score is 700+
- You can put 5% or more down
- You want the option to drop mortgage insurance once you build equity
- You're buying a condo (some condo complexes don't qualify for FHA)
Common Myths I Hear All the Time
Myth: "FHA is only for people with bad credit"
Wrong. I've had clients with 750 scores choose FHA because the rate was actually better for their specific scenario. Always run both options.
Myth: "You need 20% down for a conventional loan"
Not even close. First-time buyers can put down as little as 3%. Yes, you'll pay PMI, but unlike FHA, it falls off once you hit 20% equity.
Myth: "FHA loans take forever to close"
FHA timelines are nearly identical to conventional in 2026. The appraisal requirements are slightly different, but it doesn't add weeks to your timeline.
So Which One Should You Pick?
Here's what I do for every client: I run the numbers both ways. I compare the monthly payment, the total cost over 5 years, the total cost over the life of the loan, and the break-even points. Sometimes FHA wins by $50/month. Sometimes conventional saves you $40,000 over the life of the loan. You won't know until you see the real numbers side by side.
That's the advantage of working with a broker who has access to 160+ lenders. I'm not trying to sell you one product — I'm finding the one that actually costs you the least.
Let's Run Your Numbers
Stop guessing and get a real comparison. Book a quick call and I'll show you exactly what both options look like for your situation. No commitment, no pressure — just clarity.
