When you apply for a mortgage, one of the first decisions is whether to go with a conventional loan or an FHA loan. Both can get you into a home, but they have very different requirements and costs. The right choice depends mostly on your credit score, your down payment, and how long you plan to stay in the home. Here's how they stack up.
The quick comparison
| Feature | Conventional | FHA |
|---|---|---|
| Min. down payment | 3–5% | 3.5% |
| Min. credit score | 620+ | 580 (or 500 w/ 10% down) |
| Mortgage insurance | PMI — cancels at 20% equity | MIP — often life of loan |
| Upfront insurance fee | None | 1.75% of loan |
| Max DTI | ~45% | ~43–50% |
| Property types | Primary, second, investment | Primary residence only |
| Loan limits | Higher (conforming) | Lower, varies by county |
Down payment
Both loans allow low down payments. Conventional loans can go as low as 3% for qualified first-time buyers, while FHA requires 3.5%. The difference is small — but the credit requirements to get that low down payment are where they diverge.
Credit score
This is often the deciding factor. FHA loans are more forgiving: you can qualify with a 580 score (or even 500 with 10% down). Conventional loans typically want 620+, and you'll get the best rates with 740+. If your credit is still improving, FHA may be your only option.
Key insight: If your credit is strong (720+) and you can put down at least 5%, a conventional loan is usually cheaper over time because you can cancel PMI. If your credit is lower, FHA opens the door.
Mortgage insurance — the biggest difference
This is where the loans really differ, and it's the most important thing to understand:
- Conventional PMI automatically cancels once you reach 20–22% equity. It's temporary.
- FHA MIP usually lasts the entire life of the loan if you put down less than 10%. It's permanent unless you refinance.
Over a 30-year loan, that permanent FHA insurance can add up to tens of thousands of dollars. This is why many buyers use FHA to get in the door, build equity, then refinance to a conventional loan to drop the insurance.
Compare both loans with real numbers
Run your home price through both calculators and see the actual monthly payment difference.
Open the CalculatorWhich should you choose?
Choose Conventional if…
- Your credit score is 680+
- You can put down at least 5%
- You want mortgage insurance to eventually disappear
- You're buying an investment or second home
- You want to avoid the upfront insurance fee
Choose FHA if…
- Your credit score is 580–679
- You have a limited down payment
- You have a higher debt-to-income ratio
- You've had past credit issues
- You plan to refinance later once you build equity
The smart move: run both
Don't guess — the actual monthly difference depends on your exact numbers. Our calculator lets you run the same home price through both a conventional and an FHA scenario so you can compare the real payments, including PMI and MIP, side by side.
Bottom line: Strong credit and a decent down payment? Conventional usually wins long-term. Lower credit or minimal savings? FHA gets you in the door. Run your real numbers to see the difference in dollars.