Is FHA or conventional better for first-time buyers?

It hinges mostly on credit score. Below roughly 680, FHA's cheaper mortgage insurance usually wins despite its upfront premium. Above 680, conventional typically costs less — and its mortgage insurance cancels at 20% equity while FHA's usually lasts the life of the loan.

Can I switch from FHA to conventional later?

Yes — refinancing FHA to conventional once you reach 20% equity is the standard play to drop FHA's permanent mortgage insurance. We proactively flag this for our FHA clients when Utah appreciation gets them there.

Do sellers prefer conventional offers over FHA?

Some listing agents perceive FHA as slower or stricter on appraisals, which can matter in multiple-offer situations. In practice, a well-prepared FHA buyer with a strong lender closes just as reliably — the lender's reputation matters more than the loan type.

Loan Programs

FHA vs. Conventional Loans in Utah: Which Actually Costs Less?

By Chad Knowles, Owner/Broker NMLS #968860 · Published June 30, 2026

Short answer: For Utah buyers with credit scores above roughly 680 and at least 5% down, conventional loans usually cost less — their mortgage insurance is cheaper at higher scores and cancels at 20% equity. Below 680, or with higher debt ratios, FHA’s flat-priced insurance and flexible underwriting often make it the better deal despite its upfront premium.

The insurance math that decides it

Both programs charge mortgage insurance below 20% down, but they price it oppositely:

FHA charges 1.75% of the loan upfront (usually financed) plus a flat monthly premium — the same price whether your credit is 580 or 800. With less than 10% down, it lasts the life of the loan.
Conventional PMI is risk-priced: cheap for 740+ credit, expensive below 660. It cancels automatically at 22% equity (or on request at 20%).

That’s why credit score is the fulcrum. A 750-score buyer pays a small, temporary PMI on conventional; a 620-score buyer pays a large one, making FHA’s flat rate a bargain.

A realistic Utah example

On a $450,000 purchase with 5% down ($427,500 loan):

740 credit: conventional PMI might run ~$110/month and disappear in 5–7 years with Utah appreciation. FHA would cost ~$7,500 upfront plus ~$195/month, forever. Conventional wins clearly.
630 credit: conventional PMI could exceed $350/month with a worse rate. FHA’s ~$195/month flat premium and gentler rate pricing win — and the exit plan is refinancing to conventional at 20% equity. FHA wins, with a planned exit.

Beyond insurance: where each program flexes

FHA is more forgiving on: debt-to-income ratios (into the high 40s and sometimes beyond), recent credit events (shorter waiting periods after bankruptcy/foreclosure), and gift funds covering the entire down payment.

Conventional is better for: condos (fewer building restrictions), investment flexibility down the road, avoiding upfront insurance premiums, and buyers who’ll hit 20% equity quickly in an appreciating market.

Don’t guess — quote both

This is a math problem, not a philosophy debate, and the answer changes with every rate sheet. On every pre-approval we run FHA and conventional side by side and show you the total cost of each over your expected time in the home. Get your comparison free — it takes one conversation.