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QUICK ANSWER — FHA pros: 3.5% down payment, 580 credit minimum, flexible DTI up to 57%, 100% gift funds allowed, lower rates than conventional. FHA cons: lifetime mortgage insurance (0.55% annually), 1.75% upfront MIP, loan limits ($532,900 in Clark County), primary residence only, FHA appraisal requirements.
Reviewed by Vatche Saatdjian·Valley West Mortgage·NMLS #65506·790+ five-star reviews

FHA Loan Pros & Cons

An honest look at FHA strengths and trade-offs. The right loan depends on your credit, savings, and goals.

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Min Down Payment
50+
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Avg Days to Close
HONEST LOOK

The Full Picture

✓ FHA Advantages
✓ Just 3.5% down payment
✓ 580 credit score minimum
✓ DTI up to 57% allowed
✓ 100% gift funds for down payment
✓ Lower rates than conventional
✓ Seller pays up to 6% closing costs
✓ 2 years after bankruptcy OK
✓ 1-4 unit properties eligible
✗ FHA Trade-Offs
✗ Mortgage insurance for life of loan
✗ 1.75% upfront MIP added to loan
✗ Loan limits ($532,900 in Las Vegas)
✗ Primary residence only
✗ FHA appraisal stricter than conventional
✗ Some condos not FHA-approved
✗ Sellers may prefer conventional offers
✗ Cannot use for investment properties
STRATEGY

The Smart FHA Exit Strategy

FHA's biggest downside — lifetime MIP — has a simple solution. Here is the playbook most smart FHA buyers follow:

1
Buy with FHA — 3.5% down, get into the home now
2
Build equity — pay mortgage + home appreciates (Las Vegas avg 4%/yr)
3
Refinance to conventional — at 20% equity (typically 4-6 years), drop MIP entirely
4
Save $200+/mo — no more MIP, lower rate, keep building equity
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FAQ

Questions? Answered.

Yes for most buyers with credit under 720 or less than 10% down. The lower rate and smaller down payment outweigh the MIP cost for the first several years. You can always refinance to conventional once you have 20% equity.

Lifetime mortgage insurance. Unlike conventional PMI which drops at 20% equity, FHA MIP stays for the entire loan. The solution is to refinance to conventional once you reach 20% equity and 620+ credit.

It depends on your timeline. FHA is cheaper in years 1-7 for most borrowers. Conventional becomes cheaper after year 7-10 when PMI drops. If you plan to refinance or sell within 7 years, FHA usually wins.

Some sellers prefer conventional offers due to FHA appraisal requirements. However, a strong pre-approval letter and competitive offer price can overcome this. In balanced markets like Las Vegas 2026, FHA offers are widely accepted.

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EXPLORE

FHA Resources

→ FHA Requirements → FHA Rates Today → FHA Calculator → Credit Score Guide → Down Payment Guide → FHA vs Conventional → First-Time Buyer → Get Pre-Approved → Closing Costs → Pros & Cons

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FHA rates from 5.750%
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