FHA Loan vs Conventional Loan: Which Is Better?

FHA Loan vs Conventional Loan: which is better?

Bottom lineFirst-time buyers with credit below 680 or limited savings usually do better with FHA: lower credit bar and 3.5 percent down. Buyers with credit above 700 and 5 percent or more to put down usually pay less with conventional because the mortgage insurance is cheaper and removable.

Reviewed by Juan Fernando Romero, NMLS 2557318Updated October 14, 2026

Side by side

	FHA Loan	Conventional Loan
Minimum credit score	580 (500 with 10 percent down)	620
Minimum down payment	3.5 percent	3 percent for first-time buyers
Upfront mortgage insurance	1.75 percent of loan amount	None
Monthly mortgage insurance	Yes, often for the life of the loan	PMI, removable at 80 percent loan-to-value
Seller concessions allowed	Up to 6 percent	Up to 3 to 9 percent depending on down payment
Property types	Primary residence only	Primary, second home, investment

Figures are typical market ranges as of October 2026. Actual terms depend on the lender, your credit, the property and the program, and are confirmed on your Loan Estimate or term sheet.

Explore each option

Home loan

FHA Loans

An FHA loan is a government-insured mortgage that allows 3.5% down with a credit score of 580 or higher, or 10% down with a score from 500 to 579.

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Home loan

Conventional Loans

A conventional loan is a mortgage not insured by the government that follows Fannie Mae or Freddie Mac guidelines.

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Frequently asked questions

Can I get an FHA loan as a first-time buyer with no credit history?

It is difficult but possible with nontraditional credit like rent and utility payment history. Most lenders still want to see a 580 score for 3.5 percent down.

When should a first-time buyer choose conventional over FHA?

When your credit is 700 or higher and you can put 5 percent down. The monthly PMI will be lower than FHA mortgage insurance and it drops off at 80 percent loan-to-value.

Can I have two FHA loans at once?

Generally no, with limited exceptions like relocation or family growth. If you are upgrading, you will usually refinance or sell first.

Do sellers dislike FHA offers?

Some do, because FHA appraisals have stricter property condition requirements. In competitive markets, a conventional offer with fewer contingencies can be stronger.