FHA vs conventional:
how to actually choose
The brochure answer: FHA for lower credit, conventional for higher. The real answer is a mortgage-insurance calculation on your file.
By Dawn M. Muñoz · Stonehaven Lending · Updated August 13, 2026
FHA wins for small down payments (as little as 3.5%) and thinner credit, at the cost of mortgage insurance that usually lasts the life of the loan. Conventional wins when your file earns cheap PMI, which cancels as equity grows.
Two kinds of mortgage insurance
FHA: an upfront premium (usually financed) plus a monthly one that typically lasts the life of the loan. Conventional PMI: priced on credit and down payment, removable once equity crosses the threshold.
Similar payments in year one can diverge sharply by year seven.
The accessibility case, honestly
Past credit events, thin credit, higher debt ratios, gift funds - FHA is built for reach. If conventional PMI comes back heavy, FHA is often the cheaper monthly.
The strong-file case
Solid credit and 10–20% down usually favor conventional: cheaper or no mortgage insurance, no upfront premium, more property flexibility. At 20% down there's no monthly mortgage insurance at all.
Choose with the exit in mind
Many buyers start FHA and refinance to conventional later. Fine - if it's a plan, not a surprise. Run your numbers in the mortgage calculator, then let a specialist price both paths.
Get the comparison priced on your profile
A specialist runs FHA and conventional side by side and replies within one business day.