FHA vs. Conventional Loans: Which Is Right for You in 2026?

Wise Capital Mortgage Team · Austin, TX · Updated August 2026

These are the two most common paths to homeownership, and both can get you to the closing table — the right one depends on your credit, your down payment, and how long you plan to stay in the home.

Side-by-side basics

	FHA	Conventional
Minimum down payment	3.5%	3%
Typical minimum credit score	580 (3.5% down)	620+
Mortgage insurance	Upfront + annual MIP, often for the loan's life	PMI, cancels at ~20-22% equity
Debt-to-income flexibility	More flexible	Stricter
Property types	Primary residence only	Primary, second home, investment

When FHA usually wins

If your credit score is below the high 600s, or your debt-to-income ratio is tight, FHA's more flexible underwriting can be the difference between qualifying and not. It's also a strong fit for buyers using gift funds for their down payment.

When conventional usually wins

If your credit is strong (680+) and you can put down 20%, conventional financing avoids mortgage insurance entirely and gives you access to second homes and investment properties, which FHA does not allow.

The Long-Term Cost Difference

FHA's mortgage insurance often lasts for the life of the loan unless you refinance out of it, while conventional PMI cancels automatically once you reach 78% loan-to-value. For buyers planning to stay long-term, that difference can matter more than the lower FHA down payment.

A simple way to decide

Ask three questions: How strong is my credit today? How much can I realistically put down? And how long do I plan to keep this home? A loan officer can run both scenarios side-by-side on your actual numbers — often the better program isn't obvious until you see real payments compared.

See both scenarios side-by-side

We'll run your FHA and conventional numbers together so you can compare real payments, not rules of thumb.

Compare My Options