Quick Answer: For most Utah first-time buyers with credit scores below 700 or limited savings, FHA is the better choice — it requires only 3.5% down and accepts scores as low as 580. For buyers with 720+ credit and 5%+ down, conventional loans often win because they have lower mortgage insurance that cancels automatically at 80% LTV, while FHA mortgage insurance lasts the life of the loan. The best choice depends on your specific credit score, down payment, and how long you plan to keep the home.
Side-by-Side Comparison
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Minimum down payment | 3.5% | 3% (first-time) / 5% |
| Minimum credit score | 580 | 620 |
| Mortgage insurance | 1.75% upfront + 0.55%/yr for life of loan | 0.3%-1.5%/yr, cancels at 80% LTV |
| DTI limit | Up to 50% | Up to 45% |
| Property requirements | Stricter — must meet HUD standards | Less strict |
| Seller concessions | Up to 6% | 3% (under 10% down) / 6% (10-25%) |
| 2026 Utah loan limit | $524,225 (most counties) | $806,500 (conforming) |
| Gift funds for down payment | 100% allowed | 100% allowed |
When FHA Wins in Utah
- Your credit score is between 580 and 700
- You have minimal savings (3.5% down vs 5%)
- You have higher debt-to-income ratio (student loans, car payments)
- You're a first-time buyer using Utah Housing Corporation programs (most UHC loans are FHA-based)
- You plan to refinance out of FHA within 3-5 years once you build equity and improve your credit
When Conventional Wins in Utah
- Your credit score is 720 or higher (lower PMI rates)
- You can put 10-20% down (PMI drops off at 80% LTV)
- You're buying a condo (some condos aren't FHA-approved)
- You want to avoid FHA's lifetime mortgage insurance
- The property has issues that wouldn't pass FHA appraisal
The Utah Housing Corporation Factor
If you're using Utah Housing Corporation (UHC) programs for below-market rates and DPA, your loan will typically be FHA-based (FirstHome program) or conventional-based (Score program). The Score program requires a 700+ credit score but comes with the advantage of PMI cancellation. Talk to your loan officer about which UHC program gives you the best overall deal.
Can I Switch From FHA to Conventional Later?
Yes. Many Utah buyers start with FHA and refinance into a conventional loan after 1-2 years once they've built equity and potentially improved their credit. This eliminates the lifetime FHA mortgage insurance. If home values continue to appreciate, you may reach 80% LTV faster than expected.
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