What's the difference between Conventional and FHA loans?

A conventional loan isn't backed by the government, while an FHA loan is insured by the Federal Housing Administration. FHA loans can be easier to qualify for with lower credit scores or smaller down payments, but they carry their own mortgage insurance. Conventional loans may have private mortgage insurance with less than 20% down, which can be removed later. Often the conventional loan costs less, and it lets you eventually escape private mortgage insurance. When a buyer qualifies for both, I run the numbers on each so you can see which one makes the best use of your money. Confirm the current FHA requirements with your lender.