Neither program is universally better. Conventional loans may cost less overall for strong-credit borrowers who reach 80% LTV; FHA can be more accessible on credit and can offer different mortgage-insurance behavior. Compare total cost over the time you'll keep the loan.
Who this may fit
Buyers with modest down payment who could plausibly go either direction and want a total-cost view.
Key decision factors
- Credit tier and how each program prices at that tier
- Down payment and cash reserves
- How long you plan to keep the loan
- Mortgage insurance structure and when it may end
- Property type and occupancy
Illustrative example
Common mistakes
- Comparing only note rate instead of total cost
- Ignoring FHA's ongoing mortgage insurance rules
- Assuming one program is always more affordable
Questions to ask a licensed loan officer
- Can you produce a total-cost comparison of both programs for my file?
- How would each program's mortgage insurance behave over five years?
- How do closing costs compare after seller and lender credits?
Sources
We link to primary sources for every substantive claim. Publication dates below are marked as unverified until confirmed under our Source Policy.
- HUD / FHA Single Family HousingU.S. Department of Housing and Urban Development · Published/effective: unverified · Last checked: 2026-07-28
Related guides and calculators
- What Is a Conventional Loan?
A plain-English explanation of conventional loans: how they work, who they may fit, and key decision factors.
- First-Time Home Buyer Guide
Conventional-loan options that may fit first-time buyers, and the decision factors that matter most.
- Private Mortgage Insurance (PMI)
How PMI works on a conventional loan, how it may be removed, and what factors influence the cost.