Trying to choose between FHA and conventional for a home in Pearland? You are not alone. Many first-time buyers and budget-conscious movers want the lowest payment, the fewest surprises, and a smooth path to closing. In this guide, you will learn the key differences, how each loan plays out at common Pearland price points, and what to check before you write an offer. Let’s dive in.
FHA vs. conventional: quick comparison
| Topic | FHA | Conventional |
|---|---|---|
| Minimum credit | Often 580 for 3.5% down; 500–579 may qualify with 10% down. Lender minimums vary. | Typically 620+; pricing improves with higher scores. First-time programs may allow 620 with limits. |
| Down payment | 3.5% minimum for most qualified borrowers; gift funds often allowed. | As low as 3% for eligible first-time buyers; 5–10% common. 20% avoids PMI. |
| Mortgage insurance | Upfront MIP is usually 1.75% of the base loan amount, often financed. Monthly MIP applies. For original LTV over 90%, MIP usually lasts for the life of the loan; at 90% or less, it often lasts 11 years. | PMI cost varies by credit and down payment. You can request cancellation at 80% LTV and it auto-terminates at 78% if payments are current. |
| Appraisal & condition | Must meet HUD minimum property standards. Repairs may be required to close. | Focuses on value with generally fewer repair requirements unless there are major issues. |
| Condos | Many condo projects require FHA approval. | Different project rules, often more flexibility. |
| DTI flexibility | Often more flexible with higher DTI and compensating factors. | Sometimes stricter, varies by program. |
| Seller concessions | Up to 6% of the sales price allowed for closing costs and prepaids. | Often 3%–6% depending on down payment and program rules. |
| Loan limits | County-specific FHA limits apply; verify for Brazoria County. | Conforming limits apply; amounts above that may require jumbo financing. |
How this plays out in Pearland
Pearland spans mostly Brazoria County with a mix of newer subdivisions and established neighborhoods. Local price points vary, so use these examples as simple illustrations, not quotes. Always confirm your numbers with a local lender.
Entry level around $200,000
• FHA at 3.5% down is about $7,000 out of pocket, plus upfront mortgage insurance that is commonly financed into the loan. Monthly MIP then applies.
• A 3% down conventional program is about $6,000 down with monthly PMI that can be removed later when you reach the LTV threshold.
• At this price, the monthly difference may be modest. If you expect to reach 80% LTV relatively soon, conventional can be attractive.
Mid range around $350,000
• FHA at 3.5% down is about $12,250, and it can be helpful for moderate-credit buyers. Keep in mind that MIP may last a long time depending on LTV.
• Conventional with 5–10% down avoids the FHA upfront premium and may offer lower long-term costs since PMI can be canceled.
• If your credit is strong, compare side-by-side quotes. The ability to remove PMI can tip the balance toward conventional over time.
Move-up around $500,000+
• Check FHA and conforming loan limits for Brazoria County before you offer. If the price exceeds local limits, FHA may not fit the entire purchase.
• Conventional or jumbo financing may be required above the limit.
• Budget carefully for Texas property taxes and homeowners insurance, which can be a larger share of your payment here.
What affects your monthly payment
Your payment is more than just rate and price. It includes:
- Interest rate and loan amount, including any financed FHA upfront mortgage insurance.
- Mortgage insurance type and cost: FHA MIP vs. conventional PMI.
- Property taxes and homeowners insurance, which are significant in Texas.
- HOA dues and any required assessments for certain communities or condos.
Because credit score, down payment, and property taxes vary, ask a local lender for a full payment estimate for both FHA and conventional using the same property address.
Appraisals and property condition
FHA appraisals check value and minimum property standards for safety and habitability. If issues are noted, repairs may be required before closing. Conventional appraisals focus on market value and typically require fewer repairs unless there are major health, safety, or structural concerns.
Buying an older Pearland home with a little deferred maintenance? Conventional financing may be more flexible on minor items. If you are considering a condo, verify FHA approval early if you plan to use FHA.
Loan limits, taxes, and insurance to confirm
Loan limits change over time and differ by county. Before shopping at higher price points in Pearland, confirm the current FHA and conforming limits for Brazoria County. Also, make sure your pre-approval uses accurate local tax rates and current insurance estimates. In Texas, those two line items can materially affect your qualifying power.
Which loan might fit you
- If your credit score is under roughly 620, compare both, since FHA is often more forgiving but may carry longer mortgage insurance.
- If you have 20% down or expect to reach 80% LTV quickly, conventional often wins on long-term cost because PMI can be removed.
- If you are eyeing a home that needs repairs, conventional may be simpler if issues are not safety-related.
- If you plan to buy a condo, check FHA project approval early or consider conventional options that fit the building.
The right answer depends on your credit, funds to close, property type, and how long you plan to keep the loan. Get quotes for both programs on the same day to compare apples to apples.
Pearland buyer checklist
- Check current FHA and conforming loan limits for Brazoria County before targeting higher price points.
- Get quotes from a lender who can show FHA and conventional side by side. Ask for full monthly payments including taxes, insurance, FHA upfront MIP, and PMI if applicable.
- If you are exploring condos, verify FHA project approval or conventional condo eligibility up front.
- Ask about down payment assistance or Mortgage Credit Certificates through Texas programs and whether your lender participates.
- Use realistic property tax and insurance estimates in your pre-approval. Obtain insurance quotes that reflect typical wind and hail coverage for our area.
- Discuss refinance timelines. If you choose FHA now, ask when you might be able to refinance into conventional to eliminate MIP.
Ready to compare your options on real homes in Pearland? Our local team pairs market expertise with clear guidance so you can move forward with confidence. Connect with The Sam Team and we will walk you through next steps, lender introductions, and your best path to a smooth closing.
FAQs
What is the monthly payment difference between FHA and conventional in Pearland?
- It depends on rate, down payment, mortgage insurance type, and local taxes and insurance; ask for side-by-side quotes that include FHA upfront MIP and conventional PMI.
Can I use an FHA loan on any Pearland house?
- No, the property must meet FHA minimum property standards, condos may need FHA project approval, and the loan amount must fall within the county’s FHA limit.
How long does FHA mortgage insurance last compared with conventional PMI?
- FHA MIP often lasts for the life of the loan at higher LTVs and typically 11 years at lower LTVs, while conventional PMI can be canceled at 80% LTV and ends automatically at 78% if payments are current.
If my credit score is around 620 in Pearland, which loan should I choose?
- 620 can be borderline for some conventional programs, so compare approvals and payments for both; FHA may be easier to qualify for, but conventional may cost less long term if PMI can be removed.
Who handles repairs required by an FHA appraisal in a Pearland sale?
- Repairs are negotiated, though sellers often address FHA-required items; if repairs are refused or delayed, it can impact timing or the deal.
Can I refinance later to remove FHA mortgage insurance on a Pearland home?
- Yes, many buyers refinance from FHA to conventional once credit and equity allow, which can eliminate FHA MIP; discuss timelines and targets with your lender.
