FHA/ Conventional

Conventional vs. FHA Loans: What’s the Difference and Which Is Right for You?

When you're shopping for a home loan, understanding the difference between Conventional and FHA loans can help you choose the right path to homeownership. These two popular mortgage options serve different types of borrowers and come with unique benefits and requirements.

Conventional Loans are not backed by the government and are typically offered by private lenders such as banks, credit unions, or mortgage companies. They often require a higher credit score (usually at least 620), and a larger down payment—commonly 5% to 20%. However, if you put down at least 20%, you can avoid private mortgage insurance (PMI), which saves you money in the long run. Conventional loans are ideal for borrowers with strong credit, stable income, and enough savings for a sizable down payment.

FHA Loans, backed by the Federal Housing Administration, are designed to help first-time homebuyers or those with lower credit scores (as low as 580) and smaller down payments—as low as 3.5%. Because of the government backing, lenders are more flexible with FHA qualifications. However, FHA loans require mortgage insurance premiums (MIP) regardless of your down payment, which adds to your monthly costs and remains for the life of the loan unless you refinance into a conventional loan later.

So which is better? It depends on your financial situation. If you have a strong credit profile and savings, a conventional loan could save you money over time. If you're working with limited credit or funds, an FHA loan may be the stepping stone to owning your first home.

At Citrus Lending, we’re here to walk you through your options and help you find the mortgage that best fits your needs. Have questions? Reach out to one of our experienced loan specialists today


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