For most buyers, the loan decision in 2026 comes down to two options: conventional or FHA. They're built for different financial profiles, and the right one usually comes down to a single question — how long will you carry mortgage insurance? Get that answer right and you could save tens of thousands of dollars over the life of the loan.
Here's how the two stack up, and how to tell which one is yours.
The Side-by-Side
| Feature | Conventional Loan | FHA Loan |
|---|---|---|
| Best For | Stronger credit, more cash for down payment. | First-time buyers, lower credit, smaller down payment. |
| Minimum Down Payment | 3% | 3.5% |
| Minimum Credit Score | Generally 620+ | 580+ (with 3.5% down) |
| Mortgage Insurance | PMI required under 20% down; removable at 20% equity. | MIP required; often for the life of the loan. |
| 2026 Conforming/Floor Limit | $832,750 | $541,287 (floor; varies by county) |
| Upfront Fee | None | Upfront MIP of 1.75% of the loan amount. |
Conventional, in Depth
A conventional loan isn't government-insured. It's the most common mortgage in the country, and if your finances are solid, it usually offers the better long-term deal.
It fits buyers with credit around 680 and up who can put down at least 5-10%, though some programs allow 3%. Because pricing is risk-based, a higher score earns a better rate — and with 30-year fixed rates in the low-6% range, every fraction of a point matters.
The real advantage is mortgage insurance you can shed. Once you reach 20% equity, you can request PMI removal and drop that monthly cost for good. That's the lever that makes conventional cheaper over time for buyers who qualify.
FHA, in Depth
An FHA loan is insured by the Federal Housing Administration. That backing lets lenders approve buyers who wouldn't clear the conventional bar — credit as low as 580 and just 3.5% down make it one of the most accessible paths to a first home.
The trade-off is mortgage insurance. FHA charges an upfront premium and a monthly one, and for most buyers putting down under 10%, that monthly MIP lasts the whole loan. The door is easier to walk through, but you pay for it over time.
FHA limits are set county by county. In Spokane County the 2026 single-family limit is $541,287 (the national floor); higher-priced markets like Coeur d'Alene run above it. Always confirm the figure for the county you're buying in.
The Decision Usually Comes Down to Insurance
- Conventional PMI: You pay it only until you hit 20% equity, then it's gone.
- FHA MIP: It typically rides along for the life of the loan.
Run a Spokane example. On a $413,000 home — right at the local median — with 5% down ($20,650), your loan is about $392,000. With conventional financing you'd carry PMI for a few years and then drop it as you build equity. With FHA you'd pay roughly $6,860 in upfront MIP at closing (1.75%) plus monthly MIP that sticks around. Over a decade, that difference adds up.
So Which One?
Ask yourself two questions. Can you reach a 20% down payment, or get there with equity reasonably soon? Then conventional likely wins on cost. Is getting into a home now — with limited cash or rebuilding credit — the priority? Then FHA's easier entry may be worth the long-term insurance.
There's no universal answer; it's your numbers. The team at Q Home Loans can run both scenarios side by side so you can see the real difference in dollars before you decide.
This content is for educational purposes only and does not constitute a loan commitment or guarantee. Loan approval is subject to credit and property approval. Contact Q Home Loans for current rates and program availability. Q Home Loans is a division of American Pacific Mortgage Corporation, NMLS #1850. Equal Housing Lender.