Two roads to the same front door
When buyers in Clark County and across the Portland metro come to me, the choice usually comes down to two loans: FHA and conventional. Both are designed for regular people buying a place to live, not investors or the ultra wealthy, and both can get you into a home with far less than the mythical 20 percent down. The difference is in the details, and those details can add up to real money over the life of your loan. My job is to make the tradeoffs clear so you can pick with confidence instead of guessing.
Here is the short version before we dig in. FHA is a government-backed loan built to be forgiving, which makes it a great fit when your credit is still climbing. Conventional is not backed by a specific government agency in the same way, and it tends to reward stronger credit with lower costs and more flexibility down the road. Neither is universally better. The right one is the one that fits your situation today and your plans for tomorrow.
How FHA loans work
An FHA loan is insured by the Federal Housing Administration, which is part of HUD. That government backing is what lets lenders say yes to buyers who might not qualify for a conventional loan yet. FHA is often the door that opens when other doors feel stuck.
The headline features are a lower credit bar and a down payment that can start at 3.5 percent for qualifying scores. FHA guidelines are also more understanding about things like a higher debt load or a credit file that is still recovering from a rough patch. The tradeoff is mortgage insurance. FHA loans carry an upfront mortgage insurance premium plus an annual premium built into your monthly payment, and on most FHA loans today that annual premium stays for the life of the loan rather than falling off automatically as you build equity. That does not make FHA a bad deal, it makes it a specific tool. For many buyers, getting into a home now with FHA and refinancing to a conventional loan later, once credit and equity improve, is a smart path.
How conventional loans work
A conventional loan is not insured by a government agency the way FHA and VA loans are. Instead it follows guidelines set by Fannie Mae and Freddie Mac, the two entities that buy most home loans in the country. Conventional is the most common loan type in America, and for buyers with solid credit it is often the better long-term value.
Conventional loans can start as low as 3 percent down for many first-time buyers, and 5 percent for others. Yes, that is lower than FHA's 3.5 percent floor, which surprises people. The bigger advantage shows up in the mortgage insurance. Conventional private mortgage insurance, or PMI, is not permanent. Once you reach roughly 20 percent equity you can request that it be removed, and it drops off automatically further down the line. For buyers with strong credit, PMI can also be priced lower than FHA's premiums. The catch is that conventional is less forgiving on credit and debt, so it is not always available to buyers who are still rebuilding.
The head to head that actually matters
Instead of memorizing every rule, focus on the handful of factors that usually decide the winner:
- Credit score: lower or recovering credit tends to favor FHA. Solid credit tends to favor conventional, both for approval odds and for cheaper mortgage insurance.
- Down payment: both start low. Conventional can begin at 3 percent for many first-time buyers, FHA at 3.5 percent, so the down payment alone rarely decides it.
- Mortgage insurance: conventional PMI can be removed as you build equity, while FHA's annual premium usually stays for the life of the loan. Over many years, that difference can be significant.
- Debt and income: FHA is generally more flexible if your monthly debts run high relative to your income.
- The property and condition: FHA has its own appraisal and property standards, which can matter on older or fixer-style homes common in some neighborhoods.
- How long you will stay: the longer you hold the loan, the more conventional's removable insurance can pay off.
Common misconceptions I hear
The first myth is that FHA is only for first-time buyers. It is not. Anyone who meets the guidelines can use it, whether it is their first home or their fourth. The second myth is that conventional always requires 20 percent down. It does not, and I say that in almost every conversation. The third is that FHA loans are somehow lower quality or that sellers will reject them. In a normal market a well-structured FHA offer competes just fine, and a good loan officer helps present it strongly.
The last misconception is the most costly: that you have to pick the perfect loan forever. You do not. Plenty of buyers start with FHA because it is the right fit today, build equity and credit, and then refinance into a conventional loan to shed the mortgage insurance later. Marry the house, date the rate, and in this case, date the loan program too. The goal is to get you into the right home on terms that work now, with a plan to improve them over time.
How to choose your loan
Start with an honest look at your credit and your monthly comfort zone, then let the numbers do the talking. The best way to decide is to see both options side by side: the payment, the mortgage insurance, the cash to close, and how each changes as you build equity. Sometimes the answer is obvious once you see it on paper. Other times FHA and conventional are close, and the decision comes down to your plans and your peace of mind.
Every situation is different, and the specifics vary based on your credit, down payment, loan type, and overall financial picture. Nothing here is a commitment to lend. But if you want a clear, no-hype comparison built around your actual numbers instead of a rule of thumb, that is exactly what I do for buyers across Vancouver, Clark County, and the greater Portland metro.
Not sure which loan fits you? Take the quick quiz to get personalized guidance and I will run FHA and conventional side by side so you can choose with confidence.
Rates and figures cited are as of August 10, 2026 from public sources and change daily; they are illustrative, not a rate quote or a commitment to lend. Your actual rate depends on your credit, loan type, property, and market conditions. Connor Webb, NMLS #1529504; Envoy Mortgage, Ltd., NMLS #6666. Equal Housing Lender.