Conventional vs. FHA Loans: Which Is Right for You?
When it comes to buying a home, one of the biggest decisions you’ll make is which type of mortgage loan fits your situation best. Two of the most common options are Conventional Loans and FHA Loans—but the differences between them can feel confusing at first glance.
At Chris Lewis | Home Loans, we believe you should feel confident and informed every step of the way. So let’s break down these two loan types, what makes each unique, and how to decide which is right for you.
What Is a Conventional Loan?
A conventional loan is a mortgage that isn’t insured or guaranteed by the federal government. These loans are offered through private lenders and typically follow the guidelines set by Fannie Mae and Freddie Mac.
Key Benefits:
Lower overall costs in the long run if you have good credit
Flexible loan terms and down payment options (as low as 3% down)
No upfront mortgage insurance premium
Ability to remove private mortgage insurance (PMI) once you reach 20% equity
Best For:
Borrowers with strong credit scores (typically 680+), steady income, and the ability to put at least 3–5% down.
If you’re a well-qualified buyer looking to save more over time, a conventional loan may be your best option.
What Is an FHA Loan?
An FHA loan, backed by the Federal Housing Administration, is designed to make homeownership more accessible—especially for first-time buyers or those with lower credit scores or smaller down payments.
Key Benefits:
Down payments as low as 3.5%
Easier qualification with lower credit score requirements (as low as 580)
Competitive interest rates
Can be used for refinancing as well as purchasing
Keep in Mind:
FHA loans do come with mortgage insurance premiums (MIP) that stay for the life of the loan in most cases, unless you refinance into a conventional loan later.
Best For:
Buyers who are working on building credit, have limited savings for a down payment, or want a smoother path to approval.
Conventional vs. FHA: A Quick Comparison
Feature | Conventional Loan | FHA Loan |
|---|---|---|
Down Payment | As low as 3% | As low as 3.5% |
Credit Score | Typically 680+ | As low as 580 |
Mortgage Insurance | Required under 20% down; removable | Required for most of the loan term |
Loan Limits | Higher in most areas | Lower, varies by county |
Best For | Strong credit & stable income | First-time buyers or lower credit |
Which Loan Is Right for You?
The right choice depends on your financial goals, credit profile, and timeline.
If you’re confident in your credit and want to minimize long-term costs, a conventional loan may make the most sense.
If you’re a first-time buyer, rebuilding your credit, or short on savings, an FHA loan could open the door to homeownership sooner.
Either way, the best first step is to talk through your options with a trusted lending expert.
We’ll Help You Find the Right Fit
At Chris Lewis | Home Loans, we take the guesswork out of home financing. We’ll look at your full financial picture, explain your loan options in plain English, and guide you toward the one that makes the most sense for your situation.
You don’t have to navigate this alone — and you shouldn’t have to feel unsure when making one of the biggest financial decisions of your life.