FHA vs Conventional: The Credit Requirements, Side by Side
McKenzie Adams editorial team · Last updated
Minimum scores, down payments, waiting periods after settlement or bankruptcy, and how each programme treats collections — the underwriting rules that decide which loan you should be preparing for.
The headline numbers
FHA: 3.5% down from a 580 score (10% down from 500), with mortgage insurance for the life of most loans. Conventional (Fannie/Freddie): 620 minimum, 3–5% down programmes exist, and mortgage insurance drops off at 20% equity. FHA is more forgiving on credit; conventional gets cheaper as your score climbs — the crossover where conventional wins is usually around 680–700.
How each treats negative history
Collections: FHA generally doesn't force payoff of small collections; conventional automated underwriting weighs them into the score and may require payoff of large non-medical ones. Charge-offs and settled accounts: both programmes care most about how long ago — seasoning — and whether anything is still unresolved. Disputed accounts: both can require disputes resolved before closing, which is why competent preparation stops disputes before application.
Waiting periods that surprise people
After Chapter 7 bankruptcy: FHA two years, conventional four. After Chapter 13: FHA can work one year into the plan with court permission; conventional two years from discharge. After a foreclosure: FHA three years, conventional seven. Debt settlement has no formal waiting period in either programme — what matters is the seasoning of the delinquencies and settled statuses, which typically read well after 12–24 months of clean history.
Which one should you prepare for?
Prepare for the loan your 90-day-out file supports, not the one you wish for. Below ~660 with recent negatives, FHA is usually the realistic target; above ~700 with seasoned history, conventional pricing wins. The right loan officer will run both — our Mortgage Preparation programme ends with a written summary they can underwrite from either way.
Questions about your own situation? Book a free 30-minute consultation or start with our published pricing.