The FHA vs. conventional debate comes down to four variables: credit score, down payment, how long you plan to stay in the home, and the purchase price relative to FHA limits.
Quick Comparison
- Min credit: FHA 500 (10% down) / 580 (3.5%) — Conventional 620 (HomeReady 3%)
- Min down: FHA 3.5% — Conventional 3%
- Mortgage insurance: FHA upfront MIP (1.75%) + monthly (0.55%/yr) — Conventional PMI only, drops at 80% LTV
- Seller concessions: FHA up to 6% — Conventional up to 3% (under 10% down)
- Rate competitiveness: FHA often better at 580–679 credit — Conventional better at 720+
When FHA Wins
Credit 580–679, limited down payment, 43–50% DTI, or you need 6% seller concessions in a flexible market.
When Conventional Wins
Credit 720+, 20% down available, long-term hold (PMI removes automatically at 80% LTV vs. FHA life-of-loan MIP), buying a condo not on FHA approved list, or competing in Denver/Boulder/Fort Collins multiple-offer situations.
The Mortgage Insurance Math (on $400K purchase)
FHA (3.5% down): $6,755 upfront MIP + $179/month — ~$15,000+ MIP over 7 years; life-of-loan requires refi.
Conventional 5% at 680 credit: ~$195/month PMI — ~$16,380 over 7 years, drops at 80% LTV.
Conventional 5% at 720+: ~$120–$140/month — ~$10K–$12K total to 80% LTV.
At 680: close call. At 720+: conventional clear winner. At 580–659: FHA wins.
When to Refinance FHA → Conventional
Credit improved to 740+, LTV at/below 80% of current value, and you've held the FHA loan 2+ years. Colorado appreciation has pushed many FHA buyers into refinance territory faster than expected.
Get a Side-by-Side Quote
We run both scenarios for every qualifying buyer — same credit pull, real numbers. Contact Tayton Capital or apply now.
📧 tj@taytoncapitalllc.com
📞 970-708-9624
Frequently asked questions
Is FHA or conventional better for a first-time buyer in Colorado?
It depends on credit score. At 580–679: FHA usually wins. At 680–719: comparison shop. At 720+: conventional typically wins. We run both scenarios for every buyer.
Can I switch from FHA to conventional after closing?
Yes — by refinancing. If your LTV is at or below 80% and your credit has improved, refinancing to conventional removes MIP and often lowers your rate.
Does FHA or conventional close faster?
Generally comparable — both average ~18 days with Tayton Capital. Conventional has slightly less federal documentation, but the difference is minimal.
What happens to FHA mortgage insurance if I put 10% down?
FHA MIP on a 30-year loan with 10%+ down runs 11 years, then drops off automatically — unlike the life-of-loan MIP on loans with under 10% down.
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