FHA vs Conventional Loans (2026)
Side-by-side 2026 loan limits, down payment and mortgage-insurance rules from HUD, FHFA and the CFPB — so you can see which path fits before you talk to a lender.
Every item cites an official source (HUD, FHFA or CFPB) and the date we checked it. Last checked Nov 7, 2026.
Official, in effect 2026 loan limits (1-unit, most counties)
| Limit type | FHA | Conventional (conforming) |
|---|---|---|
| Baseline / floor (most counties) | $541,287 | $832,750 |
| High-cost ceiling | $1,249,125 | $1,249,125 |
FHA's floor and ceiling come from HUD Mortgagee Letter 2025-23 (case numbers on or after Jan 1, 2026). The conforming baseline and ceiling come from FHFA's Nov 25, 2025 announcement for loans Fannie Mae and Freddie Mac will buy in 2026. Your county may sit between the floor and the ceiling — check the official county lists.
Sources: HUD Mortgagee Letter 2025-23 · HUD press release No. 25-145 · FHFA: 2026 conforming loan limits · Checked Nov 7, 2026
Official, in effect Down payment and mortgage insurance
FHA: Many buyers put 3.5% down. FHA charges Mortgage Insurance Premium (MIP) on every loan: upfront MIP is 1.75% of the base loan (Mortgagee Letter 2023-05). On a 30-year loan at or under the conforming limit, annual MIP is 0.55% with less than 5% down, or 0.50% with 5% or more down. We found no 2026 Mortgagee Letter changing these MIP rates.
Conventional: Many first-time programs start around 3% down, but lenders set their own floors. If you put less than 20% down, you usually pay Private Mortgage Insurance (PMI). Under federal rules explained by the CFPB, you can generally request PMI cancellation once you reach 20% equity, and PMI typically ends automatically when the loan balance hits 78% of the original value (on a current loan with a good payment history).
Sources: HUD Mortgagee Letter 2023-05 (MIP rates) · CFPB: What is mortgage insurance? · CFPB: How can I cancel PMI? · Checked Nov 7, 2026
Quick chooser
- Need a higher loan amount in a baseline county? Conventional conforming goes to $832,750; FHA's floor is $541,287.
- Smaller down payment and softer credit overlays? FHA is often the path lenders point to first — confirm with a loan officer.
- Planning to drop mortgage insurance after you build equity? Conventional PMI has a clearer cancellation path under the CFPB rules above; FHA MIP rules depend on when the loan closed and how much you put down.
- Buying in a rural area with little or no down payment? Also compare USDA Section 502 Guaranteed Loans.
Related tools and pages
FHA loan limits & MIP (detail) · Conforming loan limits (detail) · Dropping mortgage insurance · USDA rural loans · VA funding fee
General information only. Not legal, tax or financial advice. RentToolkit is not a lender, law firm or financial adviser. Mortgage rules change often and lenders can add stricter rules of their own ("overlays"), so confirm with the official source and a licensed loan officer before you act.