On a $650,000 home in a high-cost FHA-eligible county, an FHA buyer putting 3.5% down brings $22,750 for the down payment, while a conventional buyer putting 5% down brings $32,500. Assuming a 6.25% FHA rate, 6.50% conventional rate, FHA upfront mortgage insurance financed into the loan, and estimated monthly mortgage insurance, the FHA principal, interest, and mortgage insurance payment is about $4,221 per month versus about $4,135 conventional. That is an $86 monthly difference, or $5,160 over five years before taxes, homeowners insurance, and changing mortgage insurance. FHA versus conventional down payment is not simply a question of who can put down less. It is a question of cash position, credit profile, property price, and how long you expect to keep the loan.
Duane Buziak, NMLS #1110647
Table of Contents
- What the down payment numbers really mean
- FHA down payment rules and costs
- Conventional down payment flexibility
- A $650,000 worked comparison
- Local-market considerations
- Broker versus single-shelf institution
- Frequently asked questions
FHA versus conventional down payment: the core difference
FHA allows a 3.5% down payment with a credit score of 580 or higher under program guidelines. Scores from 500 to 579 generally require 10% down. In practice, a mortgage broker may have additional credit, debt-to-income, or property-condition requirements depending on the selected program.
Conventional financing can permit as little as 3% down for qualifying primary-residence buyers, although 5% down is often more practical for a wider range of approvals and pricing. Many buyers see the 3% headline and assume conventional is automatically better. It can be, especially with stronger credit, but the monthly mortgage insurance quote and rate matter more than the down payment percentage alone.
For 2026, the baseline conforming loan limit is $832,750, according to the Federal Housing Finance Agency conforming-loan-limit release. Higher-cost counties may allow more. That threshold matters for buyers in areas such as Short Pump, Glen Allen, and Virginia Beach because staying within conforming limits can create more conventional options than a jumbo structure, depending on the purchase price and down payment.
FHA keeps cash in reserve, but adds mortgage insurance
FHA is often useful when cash is the limiting factor. On a $450,000 purchase, 3.5% down is $15,750. A 5% conventional down payment is $22,500. That $6,750 difference can help cover prepaid items, moving expenses, reserves, or a repair cushion after closing.
But FHA has two mortgage-insurance components. The upfront premium is commonly 1.75% of the base loan amount and can be financed. The annual premium is paid monthly. For many borrowers making less than 10% down, FHA mortgage insurance remains for the life of the loan unless the borrower refinances into another program.
Conventional private mortgage insurance is different. It is generally required below 20% down, but it can usually be removed once the loan reaches the required equity threshold under the applicable rules. Buyers with credit scores around 740 or above often see a meaningful conventional pricing advantage. Buyers around 620 to 680 may find that FHA produces a more forgiving approval and a competitive payment, even after mortgage insurance.
Closing costs should be budgeted separately from the down payment. A reasonable planning range is roughly 2% to 5% of the purchase price, depending on title charges, prepaid taxes and insurance, discount points, and local requirements. Ask about our no-out-of-pocket closing options if preserving liquidity is a priority. Those arrangements require careful review of rate, seller concessions, and program eligibility.
The $650,000 example, line by line
This comparison assumes a 30-year fixed purchase in a county where the FHA loan amount is permitted. It is illustrative only, not a rate quote.
The FHA buyer puts down $22,750, leaving a base loan of $627,250. Financing the 1.75% upfront mortgage insurance premium adds approximately $10,977, producing a starting financed balance of about $638,227. At 6.25%, principal and interest are approximately $3,929 monthly. Estimated monthly FHA mortgage insurance at 0.55% annually adds about $292, for a combined principal, interest, and mortgage-insurance payment of approximately $4,221.
The conventional buyer puts down $32,500, leaving a $617,500 loan. At 6.50%, principal and interest are approximately $3,903 per month. Using an estimated 0.45% annual private mortgage insurance factor, monthly PMI is approximately $232. Combined principal, interest, and PMI are approximately $4,135.
The conventional buyer invests $9,750 more upfront but saves approximately $86 per month in this example. Over 60 payments, that is $5,160 in payment difference. The conventional buyer may also have a clearer path to removing PMI. FHA may still be the right move if the additional down payment would leave too little cash after closing or if conventional pricing is less favorable for the borrower’s credit profile.
Local inventory changes the best answer
In Henrico County, the median sale price was approximately $425,000 in mid-2025, according to Redfin market data. Prices and competition vary sharply by neighborhood and property condition. A well-priced home in Glen Allen or Midlothian can still attract fast offers, while some higher-priced listings in Richmond and Chesterfield may provide more room for a seller concession or repair negotiation.
That matters because an FHA offer can require more attention to appraisal and property condition. Peeling paint, missing handrails, damaged roofing, or safety issues can delay closing. Conventional financing may be a cleaner fit for a recently renovated home or a competitive multiple-offer situation. FHA can remain highly competitive when the offer is well structured, underwriting is prepared early, and the buyer has reliable funds for any appraisal-gap or repair discussion.
For larger purchases, do not assume FHA is the only low-down-payment route. Conventional, jumbo, bank statement, and asset depletion programs can be relevant for self-employed buyers and high-net-worth households. Jumbo programs commonly request six to 12 months of reserves, while many conforming primary-residence approvals may not require reserves at all. The correct answer depends on verified assets, income documentation, credit, and property type.
Start with a soft credit pull mortgage review
A soft credit pull mortgage review can help you compare FHA, conventional, and higher-balance options without a hard inquiry at the first conversation. Premium Mortgage Rates offers a no hard inquiry mortgage pre approval path designed to protect credit while the initial numbers are reviewed. It is fast, easy, and 100% free for an initial discussion.
A mortgage pre approval without hard pull is not a substitute for full underwriting, but it can clarify a realistic price range, cash-to-close target, and payment strategy. If you want a no credit hit mortgage application conversation, a soft pull mortgage broker can review the major decision points before you commit to a formal loan application.
Why a broker comparison matters
| Decision point | Mortgage broker | Single-shelf institution |
|---|---|---|
| Program access | Can compare eligible FHA, conventional, jumbo, VA, bank statement, DSCR, and non-QM options. | Typically limited to its own program menu. |
| Pricing review | Can evaluate available wholesale pricing and structure choices. | Uses its own pricing and underwriting channel. |
| Complex income | Can match self-employed or asset-based files to an appropriate program. | May have fewer alternatives if the first fit is not workable. |
| Service model | Direct advisory process, including Premium Mortgage Rates’ 24-Hour Guarantee. | Service may vary by branch, queue, or centralized team. |
| Credit-first approach | Can begin with a soft-pull review where appropriate. | Process and inquiry policies vary by institution. |
FAQ: FHA and conventional down payments
Is FHA always better with 3.5% down?
No. FHA can preserve cash, but its mortgage insurance can cost more over time. Compare the complete payment and future refinance plan.
Can conventional financing require only 3% down?
Yes, qualifying primary-residence buyers may have 3% down options. Credit, income, occupancy, property type, and mortgage insurance pricing determine eligibility.
What credit score is needed for FHA?
FHA guidelines allow 3.5% down at 580 or higher and 10% down from 500 to 579. Individual program overlays can be stricter.
What credit score is best for conventional financing?
A 620 score is a common minimum benchmark, but scores of 740 and above often produce stronger pricing and lower PMI.
Does FHA mortgage insurance go away?
With less than 10% down, FHA mortgage insurance generally remains for the loan term. Refinancing may be the path to remove it.
Can seller concessions help with closing costs?
Often, yes. Limits vary by program, down payment, occupancy, and transaction details. Your contract strategy should be reviewed before writing an offer.
Is Premium Mortgage Rates legit?
Premium Mortgage Rates is supported by Duane Buziak and Coast2Coast Mortgage, LLC. Duane is licensed in Virginia, Florida, Tennessee, Georgia, and DC, with mortgage guidance tailored to the borrower and property.
Can I get started without a hard credit inquiry?
Yes. A soft-pull review may be available for an initial qualification conversation. A hard inquiry may be needed later for a formal application or specific program decision.
FHA is often the cash-preservation choice. Conventional is often the long-term-cost choice. A premium advisory process puts both on the same worksheet before you decide, not after you have already written the offer.
Legal disclaimer: This article is general educational information, not a commitment to provide financing, a loan approval, or legal, tax, or financial advice. Rates, payments, mortgage insurance, guidelines, loan limits, and eligibility change and are subject to credit, income, assets, appraisal, property, occupancy, and program requirements. Duane Buziak is licensed to originate mortgage loans in VA, FL, TN, GA, and DC only. For actionable mortgage guidance, contact Duane regarding properties and borrowers in his licensed states.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.