FHA's mortgage insurance is the catch
FHA gets you in with less cash and a lower credit score, but the annual MIP generally stays for the life of the loan when you put less than 10% down. Conventional PMI cancels at 20% equity. Over a long hold, that difference can outweigh the easier entry — the common play is to enter with FHA and refinance to conventional once equity and credit improve.
VA is the strongest programme if you qualify
No down payment, no monthly mortgage insurance, competitive rates, and a funding fee that can be financed or waived entirely for those with a service-connected disability. Eligibility is the only barrier; if you have it, run the numbers before considering anything else.
DTI ceilings are guidelines, not laws
Automated underwriting regularly approves conventional loans above 45% and FHA loans above 50% when there are compensating factors: large reserves, a high credit score, or a small payment increase from current rent. Approval at the ceiling is still not the same as affordability.
The cash you need is more than the down payment
Closing costs typically run 2–5% of the price, and most lenders want reserves left over after closing. A buyer with exactly the minimum down payment and nothing else usually cannot close. Budget the down payment plus closing costs plus two months of payments.
FAQ
How much home can I afford with an FHA loan?
FHA allows a higher debt-to-income ratio and only 3.5% down, so it usually supports a higher price than conventional for the same income — until the mortgage insurance premium eats into the payment. The calculator shows all three programmes side by side.
Is FHA or conventional better?
FHA for lower credit scores and smaller down payments; conventional for stronger credit, because PMI is cancellable and often cheaper. Many buyers use FHA to enter and refinance to conventional within a few years.
Do I need 20% down to buy a house?
No. Conventional loans go to 3%, FHA to 3.5%, and VA and USDA to zero. Twenty percent avoids mortgage insurance, which lowers the payment — it is not a requirement to buy.
What credit score do I need for a mortgage?
Broadly: 580 for FHA with 3.5% down, 620 for most conventional loans, and no fixed minimum for VA though most lenders want 620. Better scores mean better rates, which matters more than the approval threshold itself.
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