Purchase · 5 min read
Should I use FHA or conventional financing?
July 8, 2026 · Written by Bill Egan, NMLS 7342
Short answer
FHA can be the better fit if your credit is thinner, you have less to put down, or your other monthly debts are higher — with the tradeoff that mortgage insurance often lasts for the life of the loan. Conventional can cost less over time if your credit is stronger and you can put at least 5 to 20 percent down, because that insurance can be cancelled. We pick the cheaper file, not the nicer-sounding name.
01
Why this comes up
You were told FHA is for bad credit, or that you will waste $20,000 if you pick the wrong program. The pain is choosing a name instead of a payment you can live with.
02
Where this goes wrong
You write FHA on a condo that is not HUD-approved, or conventional on credit that only fits FHA. Mid-stream product changes mean a new case number, new insurance math, and often a new lock. The contract date does not care that the brochure looked nicer.
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What we do about it
We run both when your credit allows it. Monthly FHA insurance often lasts for the life of the loan. Conventional PMI can come off later. On a condo, whether the building is approved can decide the product before the rate does. The cheaper complete file wins, not the seal on the brochure.
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How to get ready
Bring your credit and, if it is a condo, the building. Price the insurance, not just the note rate. A 740 score with 5 percent down is often cheaper as conventional. Credit in the high 500s may only fit FHA. Seller credits and down-payment help change the math — tell us those before you pick a team.