First, question the premise: most buyers, especially first-timers, have historically put down well under 20%, per National Association of Realtors data (current averages shift, so check the latest). And the comparison is bigger than FHA's 3.5% down versus 20% down conventional. There are also 3%, 5%, and 10% down conventional options, and the right move is lining them all up side by side. At a full 20% down, conventional usually wins. Its mortgage insurance disappears entirely at 20% equity, while FHA carries mortgage insurance regardless of down payment: a one-time upfront premium financed into the loan, plus an annual premium that, with less than 10% down, stays for the life of the loan. Only refinancing out of FHA removes it. So with 20% down and solid reserves, skipping mortgage insurance on a conventional loan is typically the better deal, even though FHA rates often run a bit lower. FHA earns a real look at lower down payments and weaker credit. As down payment and credit score drop, conventional pricing gets more expensive while FHA stays less credit-sensitive. FHA can also stretch qualifying ratios further on AUS-approved files, up to 46.99% housing and 56.99% total DTI. Those are hard ceilings on automated approvals, and whether a file gets approved near them depends on the automated findings, compensating factors, and lender overlays, so they are not available to everyone. FHA is neither automatically right nor automatically wrong; it depends on your down payment, credit, and timeline. Run an apples-to-apples comparison, say 3.5% FHA versus 5% and 20% down conventional, which is exactly what we build in a free Roadmap conversation.