FHA vs Conventional Loan: Which Is Right for You?
Choosing between FHA and Conventional is the #1 question we get from relocating buyers. Here's the honest breakdown — no jargon, no fluff.
| Feature | FHA Loan | Conventional |
|---|---|---|
| Min. Down Payment | 3.5% | 3% (5% typical) |
| Min. Credit Score | 580 (3.5% down) | 620-640 |
| PMI / MIP | Required for life of loan | Drops at 80% LTV |
| Loan Limits (2026) | $498K–$1.15M by county | $766,550 (conforming) |
| DTI Ratio Max | Up to 57% | Up to 50% |
| Property Types | Primary residence only | Primary, 2nd home, investment |
| Seller Concessions | Up to 6% | 3-9% depending on LTV |
| Appraisal | Stricter HUD standards | Standard appraisal |
| Best For | First-time buyers, lower credit | Strong credit, wants flexibility |
When to Choose FHA
- Credit score under 680 — FHA is more forgiving with lower scores
- Limited savings — Only 3.5% down required (on a $300K home = $10,500)
- Higher debt-to-income — FHA allows DTI up to 57% in some cases
- Gift funds for down payment — FHA allows 100% gift funds from family
- Recent credit events — Shorter waiting periods after bankruptcy (2 years vs 4)
When to Choose Conventional
- Credit score 720+ — You'll get the best rates and lowest PMI
- 20% down payment — No PMI at all, saving $100-300/month
- Second home or investment property — FHA is primary residence only
- Want PMI to drop off — FHA MIP lasts the life of the loan; conventional drops at 80% LTV
- Higher-value homes — Conforming limits are higher in many areas
The Relocator's Edge: Texas & Florida
If you're moving from a high-cost state like California or New York, your home equity or savings from selling may give you a significant advantage:
Selling CA → Buying TX
Median CA home: $750K → Sell, buy $350K in TX with 40%+ equity. Go conventional, skip PMI entirely.
First-Time in FL
No home to sell? FHA at 3.5% down. $300K home in Tampa = $10,500 down. Seller concessions can cover closing costs.
Don't Forget: VA and USDA
If you're a veteran or buying in a rural area (much of TX qualifies), you may have $0 down options that beat both FHA and conventional. El Paso, San Antonio suburbs, and many Florida markets have USDA-eligible zones. We specialize in finding which program saves you the most.
Not sure which loan fits your move?
Get a free strategy session with a licensed mortgage pro. We'll analyze your situation and tell you exactly which program saves you the most money.
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