FHA vs. Conventional for First-Time Buyers
Both loans can put you in a home with a small down payment. The difference is in the details — credit, mortgage insurance, property rules and what you'll pay over time.
By Saman Khanian
Mortgage Professional
Two routes to the same front door
The short answer
Choose the loan that costs you least — not the one you heard about first
Most first-time buyers end up choosing between FHA and conventional because both allow a small down payment. FHA starts at 3.5% down with credit scores from 580. Conventional first-time buyer programs start at 3% down, usually with a 620 score minimum and better pricing for strong credit.
The real difference is what each one costs you in the long run. FHA carries an upfront and annual mortgage insurance premium that stays for the life of most low-down-payment loans. Conventional carries private mortgage insurance only while you're under 20% equity, and it can usually be removed later.
So the rule of thumb: if you qualify for conventional, compare the total cost. If credit or recent history is a hurdle, FHA is built to say yes — and refinancing out of it later is often part of the plan.
Side by side
FHA vs. conventional, point by point
These are typical ranges. Your exact terms depend on lender, credit, property and loan purpose.
FHA may fit better if
- Your credit score is between 580 and 619
- Your debt-to-income ratio is on the higher side
- You have a shorter or more varied credit history
- You need more flexible seller concession and gift fund rules
Conventional may fit better if
- Your score is 620 or higher with stable documented income
- You want mortgage insurance that can come off later
- You're buying above the county FHA loan limit
- You want a lower total cost over the life of the loan
See both payments side by side
Adjust the home price, rates and credit score to estimate principal, interest and mortgage insurance for each loan.
Illustrative estimate only — not a loan offer. Mortgage insurance, taxes and homeowners insurance vary by lender, property and program.
FHA
$2,992/mo
- Down payment
- $15,750
- Loan amount
- $441,849
- Mortgage insurance
- $199/mo
Conventional
Lower here$2,960/mo
- Down payment
- $13,500
- Loan amount
- $436,500
- Mortgage insurance
- $273/mo
Want these numbers run on your real scenario?
Apply NowMaking the choice
Five steps to picking your loan
1. Pull your credit and check the numbers
Know your score and debt-to-income ratio before you compare loans — they decide which programs you can actually use.
2. Get pre-approved for both
Ask for estimates on FHA and conventional using the same price. The difference is often clearer than any article can explain.
3. Compare the total cost, not the rate
Look at monthly payment with insurance, upfront costs and how long the insurance stays. That's where the real difference sits.
4. Think about the next five years
Planning to refinance, sell or stay? Each changes whether removable mortgage insurance or FHA's flexibility matters more.
5. Make an offer that fits the program
Seller concessions and repair requests need to stay within the rules of the loan you chose — your loan officer can guide the contract.
Frequently asked questions
The questions first-time buyers ask us most.
Written by
Saman KhanianMortgage professional at Equitable Lending, helping first-time buyers across Los Angeles and nationwide compare loan programs and choose with confidence.
Let's put both options on one page
Apply for a pre-approval and we'll show you your FHA and conventional numbers side by side, with the honest total cost of each.