Going through a conventional home mortgage loan and an FHA home mortgage loan all depends on your financial situation, but here are several reasons why going with a conventional loan may be more beneficial over an FHA loan:

1. No Mortgage Insurance with Larger Down Payments:

With a conventional loan, if you make a down payment of 20% or more, you can avoid private mortgage insurance (PMI) altogether. FHA loans, on the other hand, always require mortgage insurance, regardless of the down payment amount, and this insurance lasts for the life of the loan unless you refinance.

2. Lower Long-Term Costs:

Even if you put down less than 20% on a conventional loan and have to pay PMI, this insurance can typically be removed once you reach 20% equity in the home. With FHA loans, mortgage insurance premiums (MIP) are required for at least 11 years or for the entire loan term, depending on your down payment. This makes a conventional loan cheaper in the long run if you can eventually eliminate PMI.

3. More Flexibility with Property Types:

Conventional loans offer more flexibility in terms of the types of properties you can buy. FHA loans are more restrictive and may not be allowed for certain types of properties, such as investment homes or vacation homes.

4. Higher Loan Limits:

For borrowers looking to purchase more expensive homes, conventional loans have higher loan limits in many areas. FHA loans have set limits that vary by location, but they are generally lower than conventional conforming loan limits, which means FHA might not work for higher-priced properties.

5. Less Strict Property Standards:

Homes purchased with FHA loans must meet strict property condition standards, meaning the home must be in excellent condition to qualify. Conventional loans are less strict in this regard, giving you more options when buying older or fixer-upper properties.

6. Better for Strong Credit Scores:

If you have a good or excellent credit score (generally 680 and above), conventional loans typically offer lower interest rates compared to FHA loans. FHA loans are designed for borrowers with lower credit scores, so they tend to have slightly higher rates for those with good credit.

7. Less Upfront Costs:

FHA loans require an upfront mortgage insurance premium (UFMIP), which is 1.75% of the loan amount, added to the total mortgage balance. Conventional loans don’t require this upfront cost, meaning you’ll save money at closing.

Should you go Conventional or FHA on a home mortgage loan?

A conventional loan may be the better choice if you have a strong credit score, can make a larger down payment, and want to avoid long-term mortgage insurance costs. Additionally, if you’re looking for more flexibility in property types or loan amounts, a conventional loan is often the more attractive option.