Conventional Loans vs. FHA in Lee’s Summit – Which Fits You Best?

Conventional Loans vs. FHA in Lee’s Summit – Which Fits You Best?

When buying a home in Lee’s Summit, one of the most important decisions you’ll make is choosing the right type of mortgage. Two of the most common loan options are conventional loans and FHA loans. Both can help you achieve homeownership, but they differ in down payment requirements, credit flexibility, mortgage insurance, and long-term costs.

This guide breaks down conventional loans vs. FHA loans in Lee’s Summit, helping you understand how each works and which one might fit your financial goals best.

Understanding Conventional Loans

Conventional loans are mortgages that are not insured by the federal government. They’re backed by private lenders and often conform to standards set by Fannie Mae and Freddie Mac. These loans are ideal for borrowers with strong credit and stable income who can make a moderate down payment.

In Lee’s Summit, conventional loans are common among buyers looking to avoid long-term mortgage insurance and qualify for competitive interest rates.

Key Features of Conventional Loans

• Minimum down payment of 3–5% for most borrowers. 
• Credit score requirements usually start at 620 or higher. 
• Private mortgage insurance (PMI) required if down payment is under 20%. 
• Option to remove PMI once 20% equity is reached.
  

Understanding FHA Loans

FHA loans are government-backed mortgages insured by the Federal Housing Administration. They’re designed to help first-time buyers and those with lower credit scores or limited savings for a down payment.

These loans are especially popular among Lee’s Summit buyers entering the housing market for the first time or rebuilding their credit.

Key Features of FHA Loans

• Down payments as low as 3.5% with a credit score of 580 or higher. 
• More flexible qualification standards for credit and debt ratios. 
• Mandatory upfront and annual mortgage insurance premiums (MIP). 
• Loan limits that vary by county and property type.

Credit Score Requirements

Credit history plays a major role in determining which loan is best for you.

Conventional Loans

Conventional lenders typically require a credit score of at least 620, though higher scores earn better interest rates and lower PMI. Borrowers with strong credit may save significantly over time.

FHA Loans

FHA loans are more lenient, accepting scores as low as 580 for the 3.5% down payment option. Borrowers with scores between 500 and 579 may still qualify with a 10% down payment.

Down Payment Comparison

The down payment is often a deciding factor for first-time buyers.

Conventional Loans

Conventional mortgages typically require 3–20% down depending on credit and loan type. Putting down 20% eliminates PMI entirely, offering long-term savings.

FHA Loans

FHA loans require a minimum of 3.5% down, making them attractive for buyers with limited cash reserves. However, mortgage insurance remains for the life of the loan unless refinanced into a conventional mortgage later.

Mortgage Insurance: PMI vs. MIP

Mortgage insurance protects the lender if you default, but the way it’s structured differs between loan types.

Conventional Loans

• PMI is required if you put down less than 20%. 
• It can be canceled once you reach 20% home equity. 
• PMI rates depend on credit score and loan amount. 

FHA Loans

• Require both upfront and annual mortgage insurance premiums. 
• Upfront MIP is typically 1.75% of the loan amount. 
• Annual MIP lasts for the life of the loan (unless refinanced).

Loan Limits and Property Eligibility

Conventional Loans

Loan limits are set by the Federal Housing Finance Agency (FHFA). For 2025, the conforming limit in Jackson County is $766,550 for single-family homes.

FHA Loans

FHA loan limits are lower, set at $498,257 for the same area in 2025. This means buyers looking for higher-priced homes in Lee’s Summit may need a conventional loan.

Which Loan Offers Better Long-Term Savings?

If you plan to stay in your home long-term and can afford a larger down payment, a conventional loan often provides better long-term savings due to lower insurance costs and flexibility in removing PMI.

For short-term homeowners or those planning to refinance later, an FHA loan may make sense due to its accessibility and low upfront cash requirement.

Who Should Choose FHA vs. Conventional?

FHA Loans May Be Best If You:

• Are a first-time buyer with limited savings. 
• Have lower credit or past financial challenges. 
• Need flexible qualification guidelines. 

Conventional Loans May Be Best If You:

• Have good credit and stable income. 
• Can make at least a 5–10% down payment. 
• Want to avoid long-term mortgage insurance costs.

Work With the Molly Dean Mortgage Team

Choosing between FHA and conventional loans can feel overwhelming—but you don’t have to make the decision alone. The Molly Dean Mortgage Team helps Lee’s Summit buyers compare programs, calculate long-term costs, and find the best mortgage fit for their goals.

Ready to explore your options? Contact the Molly Dean Mortgage Team today for a consultation and personalized loan comparison.