Conventional vs. FHA Loan in Arizona: A 2026 Comparison

When buying a home, the two most common loan types you'll hear about are Conventional and FHA. Choosing the right one can save you thousands. Here’s the 2026 breakdown for Arizona buyers.

The Main Difference: Mortgage Insurance

The biggest difference is the mortgage insurance. Both loans require it if you put down less than 20%, but they treat it very differently.

• Conventional Loan: You pay Private Mortgage Insurance (PMI). The great news? This PMI is temporary. You can request to have it *canceled* once your loan balance drops to 80% of your home's value.
• FHA Loan: You pay a Mortgage Insurance Premium (MIP). This includes an upfront fee (1.75% of the loan) and a monthly fee. If you put down less than 10%, this monthly MIP lasts for the *entire life of the loan*. You can only get rid of it by refinancing.

Other Key Comparisons

• Down Payment: FHA allows 3.5% down. Conventional now allows as little as 3% down for first-time buyers.
• Credit Score: FHA is more flexible, allowing scores as low as 580. Conventional loans typically require a 620 minimum.

Which is Better for You?

For most buyers in Arizona, a Conventional loan is the better long-term choice if you can qualify (620+ credit). The ability to cancel your mortgage insurance is a massive financial advantage. An FHA loan is an excellent tool if you need more flexible credit requirements to get your foot in the door. We can run both scenarios for you in minutes to see which is the clear winner for your situation.