Understanding FHA and Conventional Loans

What Is an FHA Loan?

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration. It is designed to assist borrowers with lower credit scores or limited savings for a down payment.

• Minimum Down Payment: 3.5%
• Minimum Credit Score: 580 (or 540 with 10% down)
• Mortgage Insurance: Required for the life of the loan
• Use Case: Primarily for primary residences

What Is a Conventional Loan?

A Conventional loan is not insured by the government and is offered by private lenders. These loans often have stricter requirements but can provide more flexibility for those who qualify.

• Minimum Down Payment: 3%
• Minimum Credit Score: 620
• Mortgage Insurance: Not required with 20% down
• Use Case: Can be used for primary homes, second homes, and investment properties

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