FHA vs. Conventional Loans in Arizona: The 2026 Guide
Choosing between an FHA loan and a Conventional loan is one of the biggest decisions you'll make when buying a home in Arizona. Both are excellent options, but they are designed for different financial situations. This guide breaks down the key differences to help you decide.
Key Differences at a Glance
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Down Payment | As low as 3.5% | As low as 3% - 5% |
| Credit Score | More flexible (580+ for 3.5% down) | Stricter (Typically 620+) |
| Mortgage Insurance | Required (MIP) for most of the loan life | Cancelable (PMI) once you reach 20% equity |
| Loan Limits | Capped by county (e.g., Maricopa County) | Higher limits; Jumbo options available |
Deep Dive: Mortgage Insurance (MIP vs. PMI)
This is the most important difference. FHA loans require Mortgage Insurance Premium (MIP). You pay an upfront premium (usually 1.75% of the loan) and a monthly premium. If you put down less than 10%, this monthly MIP lasts for the entire life of the loan. With a Conventional loan, you pay Private Mortgage Insurance (PMI), which can be canceled once your loan-to-value ratio reaches 80% (meaning you have 20% equity).
Winner: Conventional is better long-term due to cancelable PMI.
Deep Dive: Credit Scores & Flexibility
FHA loans are more forgiving of lower credit scores, making homeownership accessible to more people. Conventional loans require a stronger credit profile, but they reward high-score borrowers with better interest rates.
Winner: FHA is more accessible for those with lower scores.
Which is Right for You?
- An FHA Loan is often perfect for first-time homebuyers or those with less cash for a down payment and a less-than-perfect credit history.
- A Conventional Loan is typically the better financial choice for borrowers with strong credit (620+) and a down payment of at least 3-5%, as you can avoid lifelong mortgage insurance.
The best way to know for sure is to compare them side-by-side. Apply today and I'll run the numbers for your specific situation to see which loan saves you the most money.
Jonathan Moses
Senior Loan Officer | NMLS #2064741
This guide was prepared by Jonathan Moses (NMLS #2064741), the senior loan officer and founder of Roadrunner AZ Lending. With years of experience in the Phoenix and Scottsdale markets, Jonathan is dedicated to providing expert, transparent advice. Learn more about Jonathan.