Conventional Loans: 3%

For example, if you are buying a home for $200,000, the minimum down payment would be $6,000.

FHA Loans: 3.5%

For example, if you are buying a home for $200,000, the minimum down payment would be $7,000.

Conventional: 620+

The minimum credit score required for a conventional loan can vary depending on the lender and the specific terms of the loan. In general, you will need a credit score of 620 or higher to be considered for a conventional loan. However, some lenders may require a higher credit score, especially for loans with a low down payment or higher loan-to-value ratio.

FHA: 500+

The minimum credit score required for an FHA loan is generally 580. However, if you have a credit score between 500 and 579, you may still be able to qualify for an FHA loan, but you will need to make a down payment of at least 10%.

Brought to you by Fannie Mae 12/28/2022.

Conventional: $726,200

Brought to you by HUD 12/28/2022.

FHA: varies by county

Conventional: None

FHA: 1.75% of the loan amount

An upfront mortgage insurance premium (aka UFMIP) is a fee that is charged at the time you take out a mortgage loan. This fee is typically paid to the Federal Housing Administration (FHA).

The purpose of the upfront mortgage insurance premium is to provide protection to the lender in the event that you default on your loan. The premium is typically 1.75% of the loan amount, and it is added to your loan balance.

Example

Suppose you are taking out an FHA loan to purchase a home with a purchase price of $300,000. You are making a down payment of 5% of the purchase price, or $15,000. The loan amount will be $285,000, which is the purchase price minus the down payment.

The UFMIP is 1.75% of the loan amount. So, in this case, the UFMIP would be calculated as follows:

UFMIP = 1.75% x $285,000 = $4,962.50

Your new loan balance = $285,000 + $4,962.50 = $289,962

Conventional

In a conventional loan, you will pay monthly PMI, or private mortgage insurance, if you put less than 20% down.  PMI is a type of insurance that protects the lender in the event that a borrower defaults on their mortgage. The better your credit score and the more you put down, the lower your PMI. 

FHA

MIP, or mortgage insurance premium, is required for all FHA loans, regardless of the down payment amount, and it is paid by the borrower as part of their monthly mortgage payment.  MIP also helps the lender in the event that a borrower defaults on their mortgage.  

If you put 3.5% down, your MIP factor is .85%. Anything more is .8%.

*As of Feb. 22nd 2023, FHFA has lowered the MIP factor to .55%.

Difference

One key difference between PMI and MIP is that PMI can be cancelled once the loan-to-value ratio (LTV) of the mortgage reaches 78% or lower, while MIP must be paid for the life of the loan if you put less than 10%. If you put more than 10% down, it’ll take 11 years to come off.

Example 1: Assuming $300,000 purchase price | minimum down | 740 credit score

Conventional PMI: $112/month

FHA MIP: $132/month

Example 1: Assuming $300,000 purchase price | minimum down | 680 credit score

Conventional

A borrower may need to meet certain income and debt ratios in order to be eligible for a conventional loan.

FHA

FHA loans may have more lenient requirements.  

Example

In a conventional loan, if you have a low credit score (650), the lender may not allow your DTI to exceed 45%.  

A FHA loan will.