FHA vs Conventional in Texas: how to actually choose
Ask the internet whether you should go FHA or conventional and you will get a food fight. Ask a loan officer who only has one of them to sell and you will get a sales pitch. Here is the version I give my own clients, in plain English. By the end, you will know which loan you are, and you will know it before any lender has to tell you.
The one-sentence difference
FHA is a government-insured loan built to be forgiving: it tolerates thinner credit, past bruises, and higher debt loads. Conventional is the open market's loan: it rewards stronger credit with better pricing and lets you shed mortgage insurance once you have real equity.
Where FHA usually wins
- Credit that took a hit. FHA is generally more forgiving on scores and on how recently life went sideways. If you are rebuilding after a rough patch, FHA often says yes earlier than conventional does.
- Higher debt-to-income. Student loans, car payments, a budget that is real life instead of a spreadsheet. FHA flexes further on debt ratios.
- Down payment math with weaker credit. With a modest down payment and a mid-tier score, FHA's combined rate and insurance cost frequently beats conventional's for the same buyer.
Where conventional usually wins
- Strong credit. The better your score, the harder conventional is to beat. Pricing improves with credit in a way FHA's does not.
- Removable mortgage insurance. Conventional PMI can come off once you build enough equity. FHA's monthly insurance, for most loans with a small down payment, sticks around until you refinance out of it. That difference compounds for years.
- Certain properties and condos. Conventional can be simpler on some condos and on homes where FHA's stricter property standards create friction.
The quick comparison
| FHA | Conventional | |
|---|---|---|
| Built for | Flexibility and forgiveness | Rewarding strong files |
| Credit posture | More forgiving | Pricing improves with score |
| Mortgage insurance | Upfront plus monthly; usually stays until you refinance (with a small down payment) | Monthly PMI only, removable with enough equity |
| Down payment | From 3.5% with qualifying credit | Low-down options exist for first-time buyers |
| Later move | Streamline refinance can be fast | Drop PMI, keep the loan |
How I actually decide with a client
I run your real numbers both ways. Same house, same down payment, two full scenarios side by side: payment, cash to close, insurance cost over time, and what the exit looks like in three to five years. Ten minutes of math beats a month of internet forums. Sometimes the answer surprises people in both directions.
If you want to rough it out yourself first, my payment and affordability calculators are free and anonymous. When you want the real comparison on your own file, the 60-second form starts that conversation, no credit pull.
Curious what else is on the shelf, from VA and USDA to self-employed programs? Browse the full program lineup, or read how my loans close in 22 days on average.