Quick answer: In 2026, FHA vs conventional usually comes down to credit score. Mid-600s and below, FHA usually wins: its mortgage insurance is flat-priced, so a 660 score pays the same 0.55% MIP as an 800. Around 720 and up, conventional usually wins: PMI gets cheap, there's no 1.75% upfront fee, and unlike FHA insurance at 3.5% down, PMI cancels once you build 20% equity.
The two loans are closer than most Las Vegas buyers think — until you price the mortgage insurance. Down payments are nearly identical (3.5% vs 3%), rates are in the same neighborhood, and both work for first-time homebuyers. The real fork is how each program charges for risk: FHA charges everyone the same, conventional charges by credit score. Here's the side-by-side, the 2026 numbers, and one house priced both ways at two different scores.
Key takeaways
- Credit score decides: mid-600s and below usually FHA; 720+ usually conventional; the 680–720 band is worth pricing both ways (raising your score can flip the answer).
- Down payment is a near-tie: 3.5% FHA vs 3% conventional — on a $450,000 home that's a $2,250 difference.
- Mortgage insurance is the real difference: FHA adds 1.75% upfront (UFMIP) plus a flat 0.55% annual MIP at any score; conventional PMI is credit-priced and cancellable.
- 2026 Las Vegas limits: $541,287 FHA (Clark County, one unit) vs the $832,750 conforming baseline.
- FHAFHA loans in Las Vegas (2026)The local rulebook: who qualifies and what it costs.
How do FHA vs conventional loans compare in 2026?
Indeed, nine times out of ten the decision lives in two rows of this table: the credit floor and the mortgage insurance. Meanwhile, everything else — down payment, rates, property types — is close enough that it rarely tips the choice on its own.
“The Federal Housing Administration (FHA) - which is part of HUD - insures the loan, so your lender can offer you a better deal.”U.S. Department of Housing and Urban Development “Let FHA Loans Help You” — hud.gov
| Factor | FHA | Conventional |
|---|---|---|
| Minimum down payment | 3.5% (with a 580+ score) | 3% (first-time-buyer or income-limited programs; otherwise typically 5%) |
| Credit score floor | 580 (500–579 possible with 10% down) | 620 |
| Upfront mortgage insurance | 1.75% UFMIP, usually financed into the loan | None |
| Monthly mortgage insurance | Flat 0.55% annual MIP at 3.5% down (0.50% with 5%+ down) — same price at every credit score | Credit-priced PMI — inexpensive at 760+, costly in the mid-600s |
| When the insurance ends | Under 10% down: life of the loan — refinancing is the exit. 10%+ down: after 11 years | Cancel by request at 80% LTV; ends automatically at 78% (Homeowners Protection Act) |
| 2026 loan limit (one unit) | $541,287 in Clark County, Nevada | $832,750 conforming baseline |
| Debt-to-income flexibility | More forgiving — higher DTIs approved with compensating factors | Typically to ~45%, up to ~50% with strong automated approval |
| Who it usually fits | Scores in the mid-600s and below, thinner credit, higher DTI | Scores around 720+, wants the MI to cancel, higher-priced homes |
What credit score do you need for FHA vs conventional?
The floors are 580 for FHA (with 3.5% down) and 620 for conventional — but the floors aren't the real story. In contrast, conventional pricing is tiered: agency loan-level price adjustments mean a 660 score with a small down payment pays a meaningfully worse rate and a much bigger PMI premium than a 760 score on the identical house. FHA runs the opposite way — the 1.75% upfront premium and the 0.55% annual MIP are the same whether you're at 590 or 800. That's why the crossover usually sits around the high-600s to low-700s: below it, FHA's flat pricing is a subsidy; above it, it's a tax. If you're near a tier edge, a 20–40 point score improvement before you apply can flip which loan wins.
Worked example: one $450,000 house, two credit scores
Same Las Vegas house, same illustrative 6.5% rate on a 30-year fixed — only the credit score changes. For instance, FHA: 3.5% down is $15,750, leaving a $434,250 base loan; adding the 1.75% upfront premium (UFMIP ≈ $7,599, financed) makes it $441,849. Conventional: 3% down is $13,500, leaving a $436,500 loan with no upfront fee. Monthly MIP is $441,849 × 0.55% ÷ 12 ≈ $203; PMI is quoted by score — we use an illustrative 0.60% for the 760 buyer and 1.25% for the 660 buyer. Taxes and homeowners insurance excluded.
| FHA 3.5% down (either score) | Conventional 3% down, 760 score | Conventional 3% down, 660 score | |
|---|---|---|---|
| Loan amount | $441,849 (incl. financed UFMIP) | $436,500 | $436,500 |
| Principal & interest @ 6.5% | $2,793 | $2,759 | $2,759 |
| Monthly mortgage insurance | $203 (0.55% MIP) | $218 (0.60% PMI) | $455 (1.25% PMI) |
| Total P&I + MI | $2,995 | $2,977 | $3,214 |
| Verdict vs FHA | — | Conventional saves ~$18/mo, skips the $7,599 UFMIP, and the PMI cancels | FHA saves ~$218/mo — about $2,620 a year |
Two honest footnotes. First, we held the rate equal to isolate the mortgage insurance — in the real market, a 660-score conventional quote usually carries a higher rate than the 760 quote too, which widens FHA's advantage further. Second, the 760 buyer's edge is bigger than $18: no $7,599 upfront premium, and their $218 PMI disappears at 20% equity while the FHA buyer's $203 MIP runs for the life of the loan at this down payment.
When does FHA win — and when does conventional?
FHA usually wins when:
- Your score is in the mid-600s or below — flat MIP beats credit-priced PMI.
- Your score is 500–579 and you can put 10% down, or 580+ with 3.5% — conventional's 620 floor is out of reach.
- Your debt-to-income ratio is high — FHA approves more files above conventional's comfort zone.
- Your credit history is thin or recently repaired — FHA underwriting is built for it.
Conventional usually wins when:
- Your score is around 720 or higher — PMI gets cheap and there's no 1.75% upfront fee.
- You're putting 10–20%+ down — PMI shrinks or vanishes while FHA still charges MIP.
- You want the insurance to end on its own — PMI cancels at 80% LTV, automatically at 78%.
- The price is above $541,287 — past Clark County's FHA limit, conforming room runs to $832,750.
Conventional also has an income-limited lane that most comparisons skip. Freddie Mac's Home Possible and Fannie Mae's HomeReady sit inside the ordinary conforming rules, with lighter mortgage insurance for households at or below their area median income. If that describes your file, read how Home Possible and HomeReady differ before settling on FHA.
Valley West takeThe buyers who overpay are almost always in the 680–720 band — the zone where the winner isn't obvious and most people just take whichever loan gets suggested first. Consequently, that band is exactly where we price every file both ways. As a lender we also shop the PMI quote itself across insurers, which can move the conventional number more than a rate change would. And if FHA wins today, we set the exit at closing: the plan to refinance into conventional the moment equity and score make the MIP unnecessary.
Price your file both ways in ten minutes.
Specifically, a Las Vegas loan officer runs your actual score, down payment, and debts through FHA and conventional side by side — real numbers, not rules of thumb. No obligation.
Get your fast quoteThe exit plan: how to refinance out of FHA MIP
Choosing FHA at 3.5% down isn't choosing MIP forever — it's choosing it until you refinance. Because annual MIP at under 10% down runs for the life of the loan, the standard play is: buy with FHA while your score is mid-600s, spend two or three years building equity and credit, then refinance into a conventional loan at 80% LTV or below — no PMI, no MIP, done. Even landing between 80% and 95% LTV can work if your improved score prices PMI below the 0.55% MIP you're dropping. Conventional borrowers get a cheaper version of the same move: PMI removal by request at 80% LTV, no refinance required. The one number to respect: refinancing only pays if the all-in monthly savings clear the closing costs within your expected stay.
Not sure which side of the line you're on?
Send us the basics — score range, savings, target price — and we'll show you FHA vs conventional on your numbers, plus what a refinance exit would look like later.
Get your fast quoteFHA vs conventional FAQ
Is FHA or conventional better for a 620 credit score?
Usually FHA. Conventional is technically available at 620, but PMI and rate pricing at that score with a small down payment are expensive — FHA's flat-priced MIP typically produces the lower payment. However, price both to be sure.
What credit score do you need for FHA vs conventional?
FHA: 580 with 3.5% down (500–579 requires 10% down). Conventional: 620 minimum, with pricing that keeps improving in tiers up to about 780.
Can I switch from FHA to conventional later?
Yes — that's the standard exit. For example, refinance into conventional at 80% LTV or below and the MIP is gone with no PMI replacing it. As a result, many buyers start FHA and refinance out within a few years.
Does FHA mortgage insurance ever cancel on its own?
With less than 10% down, no — it runs for the life of the loan. With 10%+ down it drops after 11 years. On the other hand, conventional PMI cancels at 80% LTV and ends automatically at 78%.
What are the 2026 loan limits in Las Vegas?
$541,287 for a one-unit FHA loan in Clark County; $832,750 for the conforming baseline. Therefore, between those numbers, conventional is often the only low-down-payment option.
Is FHA always cheaper when my score is low?
Usually below roughly 680, but not always — PMI quotes vary by insurer and down payment, and seller credits can change the math. In short, price the identical file both ways.
The bottom line
FHA vs conventional isn't a loyalty question — it's arithmetic that changes as your credit score does. Mid-600s and below, FHA's flat mortgage insurance is usually the win. At 720+, conventional's cheap, cancellable PMI usually takes it. In between, the only honest answer is to price your exact file both ways — and whichever you start with, know your exit before you close. The full conventional picture, limits, PMI exit and all, lives in our conventional loans in Las Vegas guide. If your score is the deciding factor, start with which program a 710 credit score opens.
Sources
- HUD Handbook 4000.1 — FHA credit, down payment, and MIP requirements: hud.gov
- HUD — FHA announces 2026 loan limits: hud.gov
- FHFA — Conforming loan limit values for 2026 ($832,750 baseline): fhfa.gov
- CFPB — What is private mortgage insurance?: consumerfinance.gov
Writing your own paycheck? See our self-employed mortgage guide for how lenders count your income on either program.
Across Valley West: Ready to price both sides for real? Our program-specific sites go deeper: FHAHomeLoans.services and ConventionalHomeLoans.services.
Keep reading
Last updated: July 19, 2026 — published with 2026 loan limits ($832,750 conforming / $541,287 Clark County FHA), current MIP pricing, and the 660-vs-760 worked example.
