FHA vs Conventional for First-Time Buyers
Choosing between these comes down to your credit, your cash, and how long you will keep the loan. Here is the 2026 breakdown with the numbers that actually differ.
First-time buyers often weigh FHA (3.5% down, 580 score) against conventional 97 (3% down, 620 score). Conventional 97 income limits may apply via HomeReady/Home Possible, while FHA has none.
| Factor | FHA | Conventional 97 |
|---|---|---|
| Down payment | 3.5% | 3% |
| Min score | 580 | 620 |
| MI cancellable | No | Yes, at 20% equity |
| Income limit | None | Sometimes (97% programs) |
The bottom line
Below ~660 credit, FHA usually prices better; above it, conventional 97 often wins.
Run both options with a lender before deciding — the right choice can shift by a few thousand dollars depending on your exact credit score, down payment, and how long you plan to stay in the home.
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Frequently Asked Questions
- FHA vs Conventional for First-Time Buyers — which is better in 2026?
- Below ~660 credit, FHA usually prices better; above it, conventional 97 often wins.
- Can I switch later?
- Yes. Many borrowers start with FHA and refinance into another loan once their credit and equity improve, which can also remove FHA mortgage insurance.