It's not the rate. It's the insurance.
Everyone frames conventional-vs-FHA as a rate showdown, and that's the wrong fight — the rates are usually close. The decision that quietly costs or saves you thousands is the mortgage insurance: conventional's PMI cancels around 20% equity, while FHA's MIP often lasts the life of the loan. Answer three questions and the right door is obvious.
It was never about the rate.
Buyers agonize over which program has the lower interest rate, and that's the wrong fight. The rates are often close. The decision that quietly costs — or saves — you thousands is the mortgage insurance, and the two programs handle it completely differently. Get the insurance math right and the rest mostly follows.
PMI vs. MIP — the difference that matters.
Conventional loans carry PMI: private mortgage insurance you pay only until you've built roughly 20% equity, at which point it cancels and your payment drops. FHA loans carry MIP: a government version with an upfront premium plus an annual one that, on most modern FHA loans, sticks around for the life of the loan — it doesn't fall off the way PMI does. Same idea, very different tails. On a loan you'll hold for years, that cancellable-vs-permanent distinction is the whole ballgame.
So why does FHA exist? Because it says yes.
None of that makes FHA the loser — it makes it the specialist. FHA is more forgiving on credit scores and more flexible on debt ratios, so for buyers whom conventional prices harshly or declines outright, FHA is the loan that gets them into the house. The right answer isn't universal; it's yours. And plenty of FHA buyers use it to buy now, build equity, and refinance into conventional later once their credit and equity catch up — dropping the permanent MIP in the process.
Above the limit? Now it's a different question.
Both programs live under the conforming/FHA loan limits. Buying above them turns this into a jumbo conversation, where the PMI-vs-MIP debate gives way to which investor prices your bigger loan best. If you're near the line, it's worth knowing which side you're shopping on before you write the offer.
The three questions that decide it.
How's your credit?
Strong credit (think 720+) usually makes conventional's cancellable PMI the cheaper long game. Thinner or bruised credit is exactly where FHA earns its keep — it's built to say yes when conventional gets stingy.
How long will you keep the loan?
Staying put for years? Conventional's PMI falls off once you hit ~20% equity — a real savings tail. Planning to sell or refinance soon? FHA's upfront-heavy structure stings less when the loan is short-lived.
How's the property (and the competition)?
FHA appraisals hold the home to habitability standards, and some sellers flinch at FHA offers in a bidding war. Conventional is often the smoother path on a fixer or a hot listing. The house and the market get a vote.
Straight answers.
Straight answers — the same way you'd get them on the phone.
Which one has the lower interest rate?+
Often they're close, and it varies day to day and by profile — which is exactly why chasing the rate is the wrong lens. The mortgage-insurance structure moves your total cost far more than the headline rate does.
Does FHA mortgage insurance really last the whole loan?+
On most modern FHA loans, yes — the annual MIP stays for the life of the loan, unlike conventional PMI which cancels around 20% equity. The common workaround is to refinance out of FHA later once you qualify for conventional.
Can I put less than 20% down on conventional?+
Absolutely — you'll just carry PMI until you reach ~20% equity, at which point it cancels. Low-down conventional is very much a thing; the 20% number is about when insurance ends, not what you must bring.
I have great credit. Is FHA ever still better for me?+
Occasionally — a specific debt-ratio or property situation can tip it — but with strong credit, cancellable PMI usually wins the long game. We'll run both so it's a decision, not a guess.
How do I know which one is actually cheaper for me?+
We price both side by side against how long you'll hold the loan and where your credit sits — the same three questions above. Book a call and we'll turn it into one clear number each.
Mortgage-insurance rules and loan limits are set by program and change periodically; this is general education, not a loan commitment or offer to lend. Every situation is different.
Let's make it one clear number each.
Tell me your credit, your down payment, and how long you plan to stay. I'll price both and show you the cheaper path.