The short answer
Conventional loans often cost less over time for borrowers with stronger credit and allow PMI to be removed with enough equity. FHA loans can be more flexible on credit and down payment but carry upfront and annual mortgage insurance. The better choice depends on your full financial picture.
Reviewed by Jennifer Reich, Branch Manager, NMLS 162239 · Last reviewed October 16, 2026
Side-by-side comparison
These are general features. Actual eligibility and pricing depend on your credit, income, property, and current guidelines.
| Feature | Conventional | FHA |
|---|---|---|
| Backed by | Not government-insured; most follow Fannie Mae/Freddie Mac guidelines | Insured by the Federal Housing Administration |
| Minimum down payment | As low as 3% for some eligible primary-residence buyers | 3.5% for qualified borrowers |
| Mortgage insurance | PMI when under 20% down; generally removable with enough equity | Upfront premium plus annual premium; may last life of loan |
| Occupancy | Primary, second home, or investment | Primary residence |
| Credit flexibility | Pricing more sensitive to credit | Often more flexible |
| Loan limits | FHFA conforming limits (jumbo above) | HUD county limits |
How to decide
Compare the total monthly payment, cash to close, and how long mortgage insurance would last under each option. Ask Jennifer for a side-by-side estimate based on your actual numbers.