FHA vs Conventional, decoded

An FHA loan is backed by the Federal Housing Administration. It's designed to make homeownership accessible — lower credit score requirements (580+ for 3.5% down), more flexible debt-to-income limits, and easier approval for borrowers with thin or repaired credit. The trade-off: mortgage insurance is required for the life of the loan in most cases.

A conventional loan follows guidelines set by Fannie Mae and Freddie Mac, not a government agency. You'll generally need a credit score of 620+ and can put down as little as 3%. Private mortgage insurance (PMI) is required under 20% down — but unlike FHA, PMI drops off automatically once you reach 22% equity.

• Min credit score: FHA 580 (3.5% down) / Conventional 620
• Min down payment: FHA 3.5% / Conventional 3%
• Mortgage insurance: FHA lifetime (usually) / Conventional removable
• DTI flexibility: FHA up to ~57% / Conventional up to ~50%
• Loan limits: FHA lower / Conventional higher (especially with high-balance)

• Your credit score is between 580 and 660
• Your DTI is on the higher side
• You've had a recent credit event (BK, foreclosure) and are past the waiting period
• You want the lowest possible down payment with flexible underwriting

• Your credit score is 700+
• You have 5–20% down and want PMI to eventually fall off
• You're buying a higher-priced home above FHA limits
• You want fewer property condition requirements (FHA appraisals are stricter)

Most borrowers should get quotes for both. The monthly payment, lifetime cost, and cash-to-close can differ by thousands. A broker can run the side-by-side in minutes — that's the comparison that actually matters.