Conventional vs FHA in Phoenix, 2026

• Both can buy a home you'll live in. The differences are mortgage insurance, credit guidelines, property rules, and cash to close.
• FHA: as little as 3.5% down with a 580+ credit score. Mortgage insurance is 1.75% upfront plus a monthly premium that lasts for the life of the loan with less than 10% down.
• Conventional: as little as 3% down on some programs. Monthly mortgage insurance (PMI) can be removed once you owe 80% of the home's original value, and ends automatically at 78%.
• Which costs less depends on you and the house. I compare both on your real numbers.

Who it fits

You're buying a home you'll live in, and both loans are still options. Buying a rental? DSCR loans Price above the conforming limit? jumbo

How it works

I run both loans on the same price, down payment, credit, and property. Then we compare mortgage insurance, cash to close, and whether that condo or new build is allowed on each.

What it costs

Mortgage insurance is the line most people miss. FHA calls it MIP. Conventional calls it PMI. I show you both, plus closing costs, on one page.

One quote isn't the whole picture

Many Phoenix buyers get one Loan Estimate, often from a builder's lender or a big bank, and assume that's the only option. But the same price doesn't mean the same payment. Mortgage insurance, credit rules, condo rules, and where your down payment comes from can flip which loan fits, in Mesa, Chandler, Gilbert, Glendale, or Scottsdale.

I'm Paige Martinez, a mortgage broker at Home Loans by Paige, 3420 E. Shea Blvd, Suite 200, in Phoenix. This is education, not a rate quote or an approval.

What actually changes between the two

FHA loans are insured by the Federal Housing Administration. Conventional loans usually follow Fannie Mae or Freddie Mac guidelines. Either way, a lender can add stricter rules of its own, called overlays. That's one reason I shop more than one lender.

The loans differ on mortgage insurance, credit, gifts (money a family member gives you), and seller credits (money the seller pays toward your costs). A national article that says "FHA is easier" skips the HOA on a Gilbert townhome and Arizona insurance costs. That's why I run both on the house you actually want.

Mortgage insurance, side by side

FHA (MIP): 1.75% of the loan upfront, usually added into the loan, plus a monthly premium. With less than 10% down, the monthly premium lasts for the life of the loan. With 10% or more down, it ends after 11 years.

Conventional (PMI): usually monthly when you put less than 20% down. You can ask to cancel it once your balance reaches 80% of the home's original value, and it ends automatically when your balance is scheduled to reach 78%, as long as you're current on payments.

If you don't roll the FHA upfront premium into the loan, it adds to your cash to close. And a payment screenshot that leaves out taxes, insurance, or mortgage insurance isn't your payment.

Credit, down payment, and gifts

FHA allows 3.5% down with a credit score of 580 or higher, and 10% down with a score from 500 to 579. Conventional can start at 3% down through certain Fannie Mae programs. Lenders on both sides often set their own higher score minimums.

Lower minimums don't make FHA cheaper. A buyer with a mid-range score and more money down can come out ahead on conventional. A buyer with a thin credit history and a gifted down payment may do better on FHA. I look at your middle score (lenders use the middle of your three), where your down payment comes from, and whether the gift paperwork will satisfy the lender.

Need down payment help too? That's a separate question. Tell me early. down payment help · 2026 assistance note

Condos, townhomes, and HOAs

A Chandler or Gilbert townhome can pass FHA's condo rules and fail a conventional lender's, or the other way around. How many owners live there, the HOA's budget, and any lawsuits don't show up in listing photos. I check the project before you pay for an inspection. Phoenix condo note

Builder credits

Valley builders often offer a credit for using their preferred lender. Seller credit limits differ by loan: FHA allows up to 6% of the price. Conventional allows 3% with less than 10% down, 6% with 10% to just under 25% down, and 9% with 25% or more down.

Ask the builder's lender for a Loan Estimate with taxes on the finished home and a real insurance quote. I'll show you whether the credit is worth what it looks like. new construction note

When I'd start with one or the other

FHA first: your credit history is thin, a bankruptcy was recent, or your down payment is mostly a gift with little left in savings. Pushing conventional can cost you a week. I won't build your plan around a future refinance, because no one can predict rates or home values.

Conventional first: you have strong credit, 5% to 20% down, and a home that's eligible. FHA's lifetime monthly premium on a low down payment can cost more over time. The house matters too. FHA appraisers check that a home is safe and sound, so a 1970s ranch with deferred maintenance may have an easier time on conventional. Send me the listing.

Phoenix details that change the payment

Insurance in Mesa isn't the same as in North Scottsdale. Older roofs and pool equipment change the quote. Your property taxes may not match what the seller paid, so I estimate yours from the county assessor.

Served in the military? VA requires no down payment for eligible borrowers with full entitlement and has no monthly mortgage insurance, so we compare VA first. VA 2026 note · For Veterans

What to bring for a side-by-side

Photo ID, your last two pay stubs (or a year-to-date profit and loss if you're self-employed), your last two months of bank statements, the listing, and any Loan Estimate you already have. If your credit is frozen, lift the freeze first. Self-employed buyers have other options too. self-employed loans

Call or text (602) 448-4470 with the listing and the cash you have. I'll show you conventional, FHA, VA if you've earned it, or tell you plainly why neither fits yet.