Conventional rewards strength. Government loans reward flexibility.
With good credit and some savings, conventional is often the cheapest loan over time, because its mortgage insurance goes away. With lower credit or more debt, FHA, VA or USDA often wins. The right answer depends on your numbers, not the label on the loan.
How I decide between conventional and FHA
On almost every purchase file, I price conventional and FHA side by side. The rate is only part of it. FHA charges 1.75% upfront and, with less than 10% down, keeps its monthly mortgage insurance for the life of the loan. Conventional has no upfront insurance charge, and its PMI comes off once you reach enough equity. But conventional pricing and PMI lean much harder on your credit score.
So the answer usually comes down to two things: your score, and how long you'll keep the loan. Below the high 600s, FHA often wins on monthly cost. Around 720 and up, conventional usually wins, and the gap grows every year after the PMI comes off. The calculator below shows where your break even falls.
Conventional vs FHA over time
Enter the two quotes you received. The calculator tracks PMI coming off the conventional loan and FHA mortgage insurance staying on.
Estimate on 30 year fixed loans. Conventional PMI ends at 78% of the original value on schedule. FHA uses 1.75% upfront financed and 0.55% annual premium on most loans. Excludes taxes and insurance, which are the same for both.
Fannie Mae or Freddie Mac?
Every conventional loan follows one of two rulebooks, and some files work much better under one. See Fannie Mae vs Freddie Mac.
Comparing quotes?
Two lenders, same borrower, different rates? Read why lenders quote different conventional rates before you choose.
Who conventional fits best
First time buyer? See first time buyer loans compared.
Buyers with good credit, especially 700 and up.** Buyers with 5% or more to put down,** where PMI stays modest.** Second home buyers and investors.** Buyers above FHA's limit, since conventional allows much larger loans.** Non permanent residents with work authorization,** who lost FHA eligibility in 2025.
Who should compare other loans first
Veterans should compare VA. Buyers with lower scores or higher debt should compare FHA. Buyers in eligible areas with moderate income and low debt should check USDA. See VA vs FHA vs USDA.
Credit: the 620 minimum is gone, pricing isn't
In November 2025, Fannie Mae removed its 620 minimum for automated approvals, following Freddie Mac. I work with lenders who go to 580. But a lower score still costs more in rate and PMI, so the real question is whether conventional is cheapest at your score. See credit scores and pricing.
2026 loan limit
$832,750 for a single family home in Central Florida, and up to $1,601,750 for a fourplex. See conventional loan limits.
The investor angle
See the full conventional investment property guide, conventional vs DSCR and the rental property calculator.
I've financed my own rentals since buying my first fourplex in 2011. Conventional is usually the cheapest long term money for a rental when your tax returns support the income. When they don't, a DSCR loan fills the gap. See second homes and investment.
Conventional deep dives
More detail on the questions buyers ask most.
Frequently asked questions
What credit score do I need for a conventional loan?
Fannie Mae no longer sets a minimum for automated approvals, but lenders do. Many require 620, and I work with lenders who go to 580.
How much do I need to put down?
3% for first time buyers and some income qualified buyers, 5% for most others.
Can I remove PMI on a conventional loan?
Yes. You can request removal at 80% of the original value, and it ends automatically at 78% on schedule.
Is conventional better than FHA?
With strong credit and some savings, it's often cheaper over time. With lower credit, FHA often wins. The calculator shows your break even.
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