Which should you compare first?
Ask for both if you qualify. Eligible buyers can use certain conventional programs with 3% down, and some conventional loans allow 5% down. FHA’s minimum required investment is generally 3.5% of adjusted value when the borrower qualifies for maximum FHA financing. Compare the same purchase price, term, and lock period. Review credit, income, property eligibility, and program restrictions separately.
| What to compare | FHA | Conventional |
|---|---|---|
| Mortgage insurance | Most FHA forward loans have an upfront premium and an annual premium, usually paid monthly | Low-down-payment loans commonly have private mortgage insurance (PMI). Ask how it is paid and what it costs. |
| When it ends | On a typical new 30-year FHA loan above 90% original loan-to-value, annual mortgage insurance generally runs for the loan term | For eligible loans with borrower-paid PMI, you can generally request cancellation at 80% of original value subject to conditions. Automatic termination generally occurs at the scheduled 78% point if current. |
| Cash and payment | Check whether the upfront premium is financed and how that affects the balance | Compare the down payment and quoted PMI, plus credits, points, and closing costs |
Worked example on a $500,000 purchase
At 3% down, the down payment is $15,000. At 3.5% down, it is $17,500. At 5% down, it is $25,000. On the FHA example, assuming the adjusted value is $500,000, the base loan is $482,500. A 1.75% upfront premium is about $8,444. If fully financed, the starting balance is about $490,944 before any rounding required by the loan. Compare total cash to close and the full payment using actual quotes, then compare balances and insurance costs over the time you expect to keep the loan.
Use the mortgage calculator and the guide to comparing mortgage quotes.