Quick Answer
FHA loans are government-insured, easier to qualify for (credit from 580, 3.5% down), but carry mortgage insurance (MIP) that often lasts the life of the loan. Conventional loans need better credit (~620+, best pricing at 740+), allow 3% down, and let you cancel PMI at 20% equity. Rule of thumb: FHA if your credit is lower or savings are thin; conventional if your credit is strong. Many buyers use FHA to get in, then refinance to conventional.
FHA and conventional are the two loan types most buyers choose between. The right one comes down to your credit score, your down payment, and how long you'll keep the loan. Here's how they compare.
FHA vs. conventional at a glance
| FHA | Conventional | |
|---|---|---|
| Min. credit score | 580 (500 w/ 10% down) | ~620 (best at 740+) |
| Min. down payment | 3.5% | 3% |
| Mortgage insurance | MIP — upfront + annual | PMI — cancellable at 20% |
| Insurance duration | Often life of loan | Until 20% equity |
| Best for | Lower credit / thin savings | Strong credit |
Which one fits you
Choose FHA if…
- Your credit is 580–680
- You have limited savings
- You plan to refinance later
Choose conventional if…
- Your credit is 700+
- You want to cancel PMI at 20%
- You want lower long-term cost
The common strategy
Many buyers use an FHA loan to get in the door, then refinance to conventional once their credit improves and they hit 20% equity — dropping the FHA mortgage insurance for good.
Compare payments for each with the mortgage calculator, see how your score sets your rate in mortgage rates by credit score, and review down payment options in how much down payment you need.