If you’re buying a home, you may hear “FHA” and “conventional” early in the process. Both can be worth exploring, but the better fit depends on your credit, available funds, monthly budget, and the loan offers you qualify for.

Here’s what to compare.

What’s the difference?

An FHA loan is made by a private lender and insured by the Federal Housing Administration. A conventional loan isn’t part of a government mortgage insurance program.

You donothave to be a first-time buyer to consider either option.

How much do you need for a down payment?

FHA loans can allow a down payment as low as3.5%for eligible borrowers. Some conventional programs allow eligible buyers to put down as little as3%. That means neither option automatically requires 20% down.

Your down payment is only part of the cash needed to buy a home. You should also plan for closing costs and other purchase-related expenses.

What about credit?

FHA loans may offer a path for borrowers with lower credit scores than many conventional programs allow. But your credit score alone doesn’t determine which loan is best—or whether you’ll qualify. A lender will review the full application and the requirements of the available programs.

How does mortgage insurance work?

FHA loans require mortgage insurance. It typically includes an upfront cost and an ongoing monthly cost.

With a conventional loan, a buyer putting down less than 20% may need private mortgage insurance, often called PMI. Under certain conditions, you can later cancel conventional PMI. FHA mortgage insurance follows different rules, so compare how long you may pay for it and its initial cost.

Which one costs less?

There isn’t one answer for every buyer. An FHA loan might look better in one situation, while a conventional loan might cost less overall in another.

Ask to compare options using thesame home price and down payment. Look beyond the interest rate at the estimated monthly payment, cash needed at closing, mortgage insurance, and total borrowing costs. Once you receive Loan Estimates, you can compare those figures side by side.

You don’t have to choose a loan type before asking questions.Schedule a conversation,and we can discuss which options may fit your goals.

Mike Hyche | Mortgage Loan Originator
NMLS #2539640
NEXA Lending | NMLS #1660690
MikeMyLender.com

Educational information only. Program eligibility, down payment requirements, costs, and terms vary and are subject to lender approval.