Key Takeaways
- FHA: 3.5% down, flexible credit — but mortgage insurance typically lasts the life of the loan.
- Conventional: as low as 3% down, and mortgage insurance cancels at 20% equity.
- Choose FHA for flexible credit; conventional for insurance that eventually disappears.
Two of the most popular ways to buy with a low down payment are FHA and conventional loans. Here’s how to tell which one fits you best.
The quick comparison
An FHA loan asks for 3.5% down with flexible credit guidelines — great if your credit is still improving. A conventional loan can go as low as 3% down and, crucially, its mortgage insurance cancels once you reach 20% equity, while FHA mortgage insurance typically stays for the life of the loan.
Choose FHA if…
Your credit is rebuilding, your debt-to-income is a little higher, or you want the most forgiving path to approval.
Choose conventional if…
You have solid credit and want mortgage insurance that eventually disappears — lowering your payment over time.
The honest answer
The “right” loan depends on your credit, your savings and your plans for the home. That’s a five-minute conversation, and both can often be paired with down payment assistance. Tell me your situation and I’ll run both side by side.
Related resources
Frequently Asked Questions
Is FHA or conventional better?
It depends on your credit and plans. FHA suits rebuilding credit and higher DTI; conventional suits strong credit and lets mortgage insurance cancel at 20% equity.
Does FHA mortgage insurance ever go away?
On most FHA loans, mortgage insurance lasts the life of the loan, while conventional PMI cancels once you reach 20% equity.
How much down do FHA and conventional require?
FHA is 3.5% down; conventional can be as little as 3% for qualified buyers.
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