FHA vs. conventional loans: what 2025 borrowers paid
Rates, loan costs, down payments and denial rates side by side, from 2025 HMDA records.
Updated October 24, 2026
In 2025, 66% of home-purchase mortgages were conventional, 21% FHA, 11% VA and 1.1% USDA.
| Home purchase, 2025 | Conventional | FHA | VA |
|---|---|---|---|
| Median 30-yr fixed rate | 6.625% | 6.250% | 6.125% |
| Median total loan costs | $5,570 | $11,310 | $6,490 |
| Median rate spread vs APOR | 0.13 | 0.44 | -0.36 |
| Purchase denial rate | 7.1% | 12.5% | 8.0% |
Why FHA looks cheaper on rate but costs more upfront
FHA rates are often lower than conventional rates, but FHA adds an upfront mortgage insurance premium of 1.75% of the loan (usually financed) and an annual premium for most borrowers. Conventional loans with less than 20% down carry private mortgage insurance instead, which can be removed once you reach 20% equity. Compare the APR and the monthly payment including mortgage insurance, not just the rate.
Who should consider each
- FHA: lower credit scores, higher debt-to-income ratios, or a 3.5% down payment.
- Conventional: good credit; with 20% down there is no mortgage insurance at all.
- VA: eligible veterans and service members — typically no down payment and no monthly mortgage insurance.
2026 FHA limits range from $541,287 to $1,249,125 for a one-unit home; see every county.
Data: FFIEC/CFPB HMDA 2025 public loan/application register; FHFA and HUD 2026 loan limits. Home-purchase figures cover owner-occupied single-family (1–4 unit) site-built homes, first-lien closed-end loans. Methodology