FHA vs Conventional Loans: Which Is Right for You?

FHA Loans

Backed by the Federal Housing Administration, FHA loans require as little as 3.5% down and accept credit scores from 580. The catch: mandatory mortgage insurance premiums for the life of the loan.

Conventional Loans

With 20% down and a 740+ credit score, conventional loans often offer better long-term costs. PMI drops off automatically once you hit 80% loan-to-value.

The Verdict

If your credit score is under 640 or your down payment is below 10%, FHA is likely your best option. Strong-credit buyers with 10%+ down should run the numbers both ways.