🟩 What Is an FHA Loan and How Does It Work?
Side-by-side comparisons, simplified — so you can make the right move.
One of the first big decisions first-time buyers face is choosing what kind of loan to use — and for many, it comes down to two main options: FHA and Conventional.
Both are popular. Both are powerful. But they serve different types of buyers, and the best choice depends on your unique situation.
Let’s break it down clearly so you can decide which one fits your goals — no jargon, just real talk.
🔍 Quick Overview
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Minimum Down Payment | 3.5% | 3% (first-time buyers) |
| Credit Score Flexibility | More forgiving | Stricter (usually 620+) |
| Mortgage Insurance | Required for the life of the loan (unless refinanced) | Required if <20% down, but can be removed later |
| Ideal For | Buyers with lower credit or smaller savings | Buyers with good credit and stable income |
| Loan Limits | Varies by county | Same, but higher in some areas |
| Who Backs It | Federal Housing Administration (FHA) | Fannie Mae / Freddie Mac |
🟦 FHA Loans — The Supportive Starter
FHA loans are built with first-time buyers in mind. They’re insured by the government, which allows lenders to offer more flexible guidelines — especially for buyers who:
- Have lower credit scores
- Carry higher debt-to-income ratios
- Don’t have 20% saved for a down payment
Best for:
Buyers who want more accessibility and are okay with paying mortgage insurance long-term in exchange for easier qualifying.
🛠 Also useful if you’re rebuilding credit or have limited credit history.
🟩 Conventional Loans — Flexible with Strength
Conventional loans offer more long-term flexibility — especially for buyers with:
- Strong or improving credit
- Stable employment
- At least 3%–5% down
With 20% down, you can avoid private mortgage insurance (PMI) altogether. And if you put down less than 20%, you can still remove PMI later — usually once you reach 20% equity.
Best for:
Buyers who qualify for competitive terms and want to avoid long-term insurance costs.
🎯 Great for those with solid finances and long-term goals.
🤔 So… Which Is Better?
It depends on your current picture:
| Scenario | Likely Better Fit |
|---|---|
| Credit score under 640 | FHA |
| Higher credit and lower DTI | Conventional |
| Small down payment and steady job | Either — compare! |
| Want to remove PMI later | Conventional |
| Need flexible qualification | FHA |
🧠 Pro Insight: It’s Not Just About Today
The loan you choose now impacts:
- Your monthly payment
- Your upfront costs
- Your ability to refinance later
- Your long-term equity growth
That’s why we always recommend talking to a loan expert — someone who can model both options side-by-side based on your numbers, not someone else’s.
🔁 At PRMI, You’re in Control
As a direct lender, PRMI handles most loans in-house — including FHA and Conventional — so there’s no middleman, no waiting for broker responses, and no confusion about who’s managing your loan.
You’ll know exactly what to expect, every step of the way.
👉 Want to Compare Your Loan Options?
Let’s walk through both FHA and Conventional side-by-side — and help you choose with confidence.