FHA vs Conventional Mortgage
**FHA** allows lower down payments with upfront and annual MIP. **Conventional** loans typically need 3–20% down with PMI until 20% equity—often cheaper long-run for strong credit.
Step by step
1. All-in payment
Include MIP/PMI, taxes, insurance in both scenarios.
2. Loan limits
FHA caps vary by county—conventional may be required above limit.
3. Refinance exit
Plan how and when mortgage insurance comes off.
FHA vs conventional
FHA helps entry; conventional wins when you have down payment and credit.
- FHA: Low down; MIP often for life of loan if low down.
- Conventional: PMI cancellable at 20% equity; stricter credit.
Common mistakes
- Ignoring lifetime MIP cost
- Skipping affordability stress test
FAQ
Can FHA be refinanced away?
Many borrowers refi to conventional once equity and credit improve.