The government guarantee. Investors pay a premium for FHA and VA bonds, and that premium shows up as a lower note rate. The relationship used to run the other way. Before the 2008 crash, investors in mortgage bonds watched FHA and VA loans default at higher rates than conventional and priced conventional more favorably. After the crash, those same investors put real value on the explicit U.S. government guarantee behind FHA, VA, and USDA loans, a guarantee conventional loans lack, and started paying up for that safety. Lower note rates on FHA and VA followed. For lower-credit borrowers there is a second layer: mortgage insurance. FHA's mortgage insurance is set by HUD and varies only by loan term, loan amount, and loan-to-value. Credit score never enters it. Conventional PMI, by contrast, prices heavily against a lower score. So a borrower around 650 with minimal down can pay less for FHA's MI than for conventional's, stack that on FHA's lower note rate, and come out ahead on total payment. The math flips for very strong borrowers. A couple buying with 800 scores gets very cheap conventional PMI, and conventional's down payment flexibility can beat FHA on overall payment even against a higher note rate. Which side you land on depends entirely on your profile, and the only way to know is pricing both side by side, which is exactly what we do on the free Roadmap conversation when we run your real numbers.