Many factors come into play when you are trying to buy a home. Whether you are a first-time homebuyer or have gone through the process before, there may be one question that is on your mind may be which type of home loan to get. Which type of mortgage will work better for your needs? A conventional mortgage or an FHA Home Loan?

Both of these mortgage types have their own distinct advantages, however, the qualifications and eligibility requirements differ. Knowing about the differences between these two mortgage types will help you make an informed decision on which one to choose. 

Conventional Home Loan vs FHA Loan: Which One Is Better?

Conventional mortgages are backed by a federal loan agency while FHA loans are backed by the Federal Housing Administration. Many think that FHA loans may fit first-time buyers while conventional loans will work better for experienced home buyers, but there is much more to it than that. Here are specifics when it comes to choosing between a conventional mortgage and an FHA home loan.

Credit Scores

FHa loans have a much lower requirement for credit scores than conventional mortgages. You may be able to qualify for an FHA loan with a credit score of 580. However, for conventional mortgages, you will need to have a credit score of 620 or higher to be able to qualify. 

Minimum Down Payment

The downside to FHA loans is that the down payment may be marginally higher than conventional loans. Most FHA loans may require a 3.5% down payment while conventional loans will require only 3%.

Debt-to-Income Ratio

Since they will be more lenient when it comes to credit score, an FHA loan applicant will need at least a 50% debt-to-income ratio to apply for this type of loan. As for conventional home loans, they may also require as high as 50% but may be able to go as low as 43% debt-to-income ratio for their applicants.

Loan Limits

There will be limits as to the total amount you can borrow for both FHA loans and conventional loans. However, the amount will be set by the county you will be in. It is also important to note that the regulators may change the amount for the loan limits every year.

Property Standards

FHA loans will be more strict in evaluating the property’s condition compared to conventional mortgages. The reason behind this is that you will be required to use the home as your primary residence. Unlike conventional home loans, which can be used to purchase a secondary residence.


Knowing your needs, credit score, and how much you can afford to pay in your mortgage repayments will help you decide which type of mortgage you should apply for. You may also be qualified to apply for other mortgage types, such as if you are an active military member or a veteran, you may qualify for a VA loan. If all else fails, a licensed mortgage broker will be able to help you find the best loan type for your needs and budget.

If you are looking to apply for a home loan, come to Global Key Capital! We offer conventional loans, FHA Loans, VA loans, jumbo loans, stated verified income loans, and non-traditional products. Contact us today and get closer to owning your new home!