FHA vs. Conventional Loans

The basics

An FHA loan is insured by the Federal Housing Administration. That government backing is designed to broaden access, which is why FHA loans can allow lower down payments and more flexible credit standards.

A conventional loan is not government-insured. It follows guidelines set by Fannie Mae and Freddie Mac, and typically rewards stronger credit and larger down payments with better terms.

Down payment and mortgage insurance

FHA loans often require around 3.5 percent down but include mortgage insurance premiums — both upfront and annual — that generally remain for the life of the loan.

Conventional loans can start as low as 3–5 percent down for qualified buyers. When the down payment is under 20 percent, private mortgage insurance (PMI) usually applies, but it can typically be removed once your equity reaches a set threshold.

Credit and qualifying

FHA can be more forgiving on credit history, which helps some buyers qualify. Conventional financing tends to favor stronger credit profiles.

Neither path guarantees an outcome — every application is subject to full underwriting.

Loan limits and luxury purchases

Both FHA and conventional loans have limits that vary by county. Most high-value Los Angeles purchases exceed those limits and move into jumbo financing, which is a separate category with its own rules.

For estate buyers, then, the real comparison is often not FHA versus conventional at all — it is how best to structure a jumbo loan.

Which is right for you

The answer depends on your down payment, credit, the property, and how long you intend to hold it. A short review is the fastest way to see which path fits — or whether jumbo financing is the more relevant conversation.