Side-by-Side Comparison
FHA vs Conventional for Home Buyers
FHA and conventional loans both serve primary residence buyers, but they have different costs, credit requirements, and mortgage insurance structures. The right choice depends on your credit score and down payment.
Feature Comparison
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Min Credit Score | 620+ (below 620: 20% down, from HUD's 500 minimum) | 620+ |
| Min Down Payment | 3.5% | 3% (first-time) / 5% (repeat) |
| Mortgage Insurance | Upfront MIP 1.75% + annual MIP (11 years with 10%+ down; otherwise the life of the loan) | PMI if < 20% down; cancellable |
| Max DTI | Up to 57% with compensating factors | Typically ≤ 45% |
| Loan Limit | The FHA limit HUD sets for your county | The conforming limit FHFA sets for your county |
| Property Type | Primary residence only | Primary, second home, investment |
| Gift Funds | 100% of down payment allowed | Allowed with documentation |
| Seller Concessions | Up to 6% | Up to 3% (< 10% down) |
| Appraisal Standards | Stricter (FHA condition requirements) | Standard appraisal |
Min Credit Score
FHA Loan
620+ (below 620: 20% down, from HUD's 500 minimum)
Conventional Loan
620+
Min Down Payment
FHA Loan
3.5%
Conventional Loan
3% (first-time) / 5% (repeat)
Mortgage Insurance
FHA Loan
Upfront MIP 1.75% + annual MIP (11 years with 10%+ down; otherwise the life of the loan)
Conventional Loan
PMI if < 20% down; cancellable
Max DTI
FHA Loan
Up to 57% with compensating factors
Conventional Loan
Typically ≤ 45%
Loan Limit
FHA Loan
The FHA limit HUD sets for your county
Conventional Loan
The conforming limit FHFA sets for your county
Property Type
FHA Loan
Primary residence only
Conventional Loan
Primary, second home, investment
Gift Funds
FHA Loan
100% of down payment allowed
Conventional Loan
Allowed with documentation
Seller Concessions
FHA Loan
Up to 6%
Conventional Loan
Up to 3% (< 10% down)
Appraisal Standards
FHA Loan
Stricter (FHA condition requirements)
Conventional Loan
Standard appraisal
Which Is Right for You?
Choose FHA Loan If...
First-time buyers with credit still rebuilding, a limited down payment, or higher debt-to-income ratios.
Choose Conventional Loan If...
Buyers with 620+ credit who want mortgage insurance that can come off at 20% equity (on its own at 22%), or who are buying a non-primary property.
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