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FHA vs Conventional Loans: Making the Right Choice

Jul 3, 2025
6 min read
By Clint Graves
FHA vs Conventional Loans: Making the Right Choice

FHA vs Conventional Loans: Making the Right Choice

The choice between FHA and conventional loans isn't always obvious. Here's a detailed comparison to help you decide which is best for your situation.

Key Differences at a Glance

Down Payment Requirements

  • FHA: 3.5% minimum with 580+ credit score
  • Conventional: 3% minimum with strong credit profile

    • Credit Score Requirements

  • FHA: As low as 500 (with 10% down)
  • Conventional: Usually 620+ minimum

    • Mortgage Insurance

  • FHA: Required for loan life in most cases
  • Conventional: Can be removed at 20% equity

    • When FHA Makes Sense

    Best For:

  • Lower credit scores (580-640)
  • Limited down payment
  • Higher debt-to-income ratios
  • Recent credit issues

    • Advantages:

  • More flexible credit requirements
  • Lower down payment options
  • More forgiving of past credit issues
  • Higher DTI ratios allowed

    • When Conventional Wins

    Best For:

  • Strong credit (680+)
  • 20% down payment available
  • Long-term homeownership
  • Higher loan amounts

    • Advantages:

  • No lifetime mortgage insurance
  • Lower monthly payments
  • Better interest rates
  • More property type options

    • Making Your Decision

    Consider these factors:

  • Your credit score
  • Available down payment
  • Debt-to-income ratio
  • Long-term housing plans
  • Property type and condition

    • Remember: The "right" choice depends on your specific situation and goals.

    About the Author

    CG

    Clint Graves

    Mortgage Expert specializing in loan program comparison and analysis

    Tags

    #FHA loans#conventional loans#loan comparison#mortgage types

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