Choosing between an FHA vs conventional loan comes down to your credit score and how long you will keep the loan. The mortgage insurance decides the rest.
Written by Renzo Johnson, Licensed Mortgage Loan Originator · Last updated: August 2026
FHA vs conventional loan, side by side
| FHA | Conventional | |
|---|---|---|
| Down payment | 3.5% | From 3% |
| Credit minimum | 580 | 620 |
| Mortgage insurance | Runs for the life of the loan at 3.5% down | Cancels at 80% loan-to-value |
| Upfront fee | 1.75% added to the balance | None |
| Maximum DTI | Up to 57% with compensating factors | Up to 50% |
| Property standards | Stricter appraisal requirements | More flexible |
| Condos | Project approval required | Lighter review |
The score where conventional overtakes FHA
Both charge mortgage insurance at a low down payment, yet they price it in opposite directions, and that is the whole comparison.
FHA charges the same annual premium whatever your credit looks like. A borrower at 620 and a borrower at 760 pay the identical rate. Conventional private mortgage insurance is priced on risk, so it is expensive at 620 and cheap at 760.
Consequently the two cross over somewhere in the high 600s to low 700s for most buyers. Below that band FHA usually wins, because conventional PMI at a weak score costs more than FHA’s flat premium. Above it conventional usually wins, and the margin widens as the score rises.
Then the second effect compounds it. Conventional insurance ends at 20% equity, while FHA insurance at 3.5% down never does. Therefore a borrower at 720 who stays ten years is not choosing between two similar costs. They are choosing between insurance that stops after a few years and insurance that runs for three decades.
When FHA is still the answer at a good score
- Your debt-to-income ratio is above 50%, since FHA stretches further
- You have a recent credit event, because FHA seasoning periods are shorter
- You are using an FHA 203(k) to finance renovation work
- The condo is FHA-approved but would fail a conventional review
How to decide in practice
Ask for both quotes on the same day, and compare the total monthly payment with mortgage insurance included rather than the interest rate. FHA frequently shows a lower rate and a higher payment, which is exactly the trap the rate comparison hides.
Then ask a second question: what does this cost me over the years I expect to stay? If you intend to be there a decade, run the numbers with conventional insurance ending and FHA continuing. Read how PMI cancellation works and what FHA insurance costs before you commit.
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The crossover point depends on current PMI pricing, your loan-to-value and the property type, so treat the score band above as guidance rather than a rule. Sources: HUD Handbook 4000.1 and agency mortgage insurance guidelines. The CFPB owning a home guide covers comparing offers.