FHA vs. Conventional Loans: Which Is Right for You?

Choosing the Right Loan Can Save You Thousands

One of the biggest decisions you’ll make during the home buying process is which type of loan is right for you. For many borrowers in Las Vegas, that comes down to a choice between FHA loans and Conventional loans — each with its own pros, cons, and eligibility requirements.

At Drennen Home Loans, we walk clients through these options every day. Below, we break down the key differences to help you make the right choice based on your goals, credit profile, and long-term plans.

What Is an FHA Loan?

FHA loans are backed by the Federal Housing Administration and are especially popular with first-time buyers and those with lower credit scores or smaller down payments.

FHA Loan Highlights:

• Minimum credit score: 580 (with 3.5% down)
  
• Down payment: as low as 3.5%
  
• More flexible debt-to-income ratio guidelines
  
• Requires upfront and monthly mortgage insurance
  
• Available for primary residences only
  

What Is a Conventional Loan?

Conventional loans are not government-backed and typically have stricter requirements — but offer lower long-term costs for qualified buyers.

Conventional Loan Highlights:

• Minimum credit score: typically 620 or higher
  
• Down payment: as low as 3%, but 5–20% is common
  
• Private mortgage insurance (PMI) can be canceled when equity reaches 20%
  
• Often better interest rates for high-credit buyers
  
• Available for primary homes, second homes, or investment properties
  

FHA vs. Conventional Loan Comparison

Which Loan Is Better for You?

The best loan option depends on your personal situation. Here’s how to evaluate:

✅ Choose FHA If:

• You have a lower credit score (below 650)
• You can only afford a small down payment
• You’re a first-time buyer with limited savings
• You plan to stay in the home long term (10+ years)

✅ Choose Conventional If:

• You have a credit score of 680+
  
• You can put 5%–20% down
  
• You want to avoid long-term mortgage insurance
  
• You’re buying an investment property or second home
  
• You plan to refinance in the future
  

Cost Comparison Example

Let’s say you’re buying a $400,000 home in Las Vegas.

FHA Loan Scenario:

• 3.5% down = $14,000
  
• Upfront MIP = ~$7,000 (can be financed)
  
• Monthly mortgage insurance required for the life of the loan
  

Conventional Loan Scenario:

• 5% down = $20,000
  
• PMI drops off at 20% equity
  
• No upfront MIP
  

Over time, conventional loans can offer lower total costs, but FHA can be a better entry point when upfront cash or credit is a challenge.

Common Myths Debunked

“I need 20% down to get a conventional loan.”
False. You can put down as little as 3–5% with strong credit.

“FHA is only for first-time buyers.”
Also false. You can use an FHA loan even if you’ve owned a home before — as long as it’s your primary residence.

“FHA loans are riskier.”
Not necessarily. They’re insured by the government and can actually offer more protections for lower-income buyers.

How Drennen Home Loans Helps You Decide

We don’t just quote rates — we help you plan the smartest path forward. When you apply with us, we:

• Review your income, assets, and credit
  
• Run side-by-side comparisons for both loan types
  
• Help you understand closing costs, monthly payments, and future options
  
• Recommend the right loan for your long-term goals
  

Bonus: FHA and Conventional Refinance Options

Already own a home? Both FHA and Conventional loans offer refinancing options — whether you want a lower rate, cash out, or remove mortgage insurance.

• FHA Streamline Refinance — Fast and low-cost
  
• Conventional Refinance — Drop PMI and lock in a better rate
  
• Cash-Out Refinance — Turn equity into usable funds
  

We’ll help you evaluate when it makes sense and which option gives you the biggest benefit.

Let’s Find the Right Loan for You

Choosing between FHA and Conventional doesn’t have to be confusing. We’re here to answer your questions, explain the fine print, and help you move forward with confidence.