FHA gets most of the attention when first time buyers start researching loans, but conventional loans deserve a closer look. For buyers in Ogden with solid credit and a little more saved up, a conventional loan can cost less over time and offer more flexibility. Here is how to know if it is the right fit for you.
What Is a Conventional Loan?
A conventional loan is any mortgage that is not backed by a government program like FHA, VA, or USDA. It is issued by private lenders and follows guidelines set by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that purchase most mortgages in the country.
Because there is no government guarantee behind the loan, lenders set higher standards for credit and income. But for buyers who qualify, conventional loans can offer real advantages including lower overall costs and the ability to cancel mortgage insurance once you build enough equity.
Conventional Loan Requirements in Utah
Here is what most lenders look for when you apply for a conventional loan in Ogden or Weber County:
Most lenders want 620 at minimum. The best rates come at 740 or higher.
As low as 3% with some programs. Put down 20% and you skip mortgage insurance entirely.
Slightly stricter than FHA. Some lenders go up to 50% with strong compensating factors.
The 2025 conforming loan limit for Weber County, well above FHA limits.
Employment and Income
Two years of consistent employment history is standard. Self-employed buyers can qualify with two years of tax returns showing stable or growing income. Lenders want to see that your income is reliable, not just high.
Property Requirements
Conventional loans have fewer property restrictions than FHA. This makes them a better fit for fixer-uppers, investment properties, or homes with minor cosmetic issues that might not pass an FHA appraisal. If you are eyeing a property with deferred maintenance or cosmetic wear, conventional financing is often the better path.
When a Conventional Loan Beats FHA in Ogden
Conventional is not always better, but there are clear situations where it comes out ahead for Ogden buyers.
Your Credit Score Is 680 or Higher
Once your score crosses 680, conventional loan rates become very competitive. Above 740 you will likely get a better rate with conventional than FHA, which has the same rate for everyone regardless of credit score.
You Have 5% or More to Put Down
With 5% down on a conventional loan, your mortgage insurance is lower than FHA and it is cancellable. FHA mortgage insurance sticks around for the life of the loan in most cases. Conventional PMI disappears automatically at 20% equity.
The Home Has Condition Issues
FHA appraisers flag safety concerns that conventional appraisers often let pass. If the home you want has peeling paint, a dated roof, or other issues, conventional financing is much less likely to kill the deal.
You Are Thinking Long Term
Even if the monthly payment is slightly higher upfront, cancellable PMI means conventional loans often cost less over 5 to 10 years than an FHA loan with permanent mortgage insurance premiums.
Conventional vs FHA: A Side by Side Look
| Conventional Loan | FHA Loan | |
|---|---|---|
| Minimum Credit Score | 620 | 580 |
| Minimum Down Payment | 3 to 5% | 3.5% |
| Mortgage Insurance | Cancellable at 20% equity | Required for life of loan |
| Weber County Loan Limit | $806,500 | $524,225 |
| Property Condition Rules | More flexible | Stricter FHA standards |
| Best For | 680+ credit, 5%+ saved | 620 or below credit, less saved |
Understanding Conventional PMI
If you put less than 20% down on a conventional loan, you will pay Private Mortgage Insurance (PMI). Here is what makes it different from FHA mortgage insurance:
Conventional PMI is cancellable. FHA mortgage insurance is not.
Once you reach 20% equity in your home, you can request PMI removal. At 22% equity, your lender is legally required to cancel it automatically. With FHA, most buyers pay mortgage insurance for the entire life of the loan unless they refinance into a conventional loan later.
PMI on a conventional loan typically runs 0.5% to 1.5% per year depending on your credit score and down payment. On a $375,000 loan with 5% down, that is roughly $150 to $450 per month. As your equity grows, that cost drops and eventually disappears entirely.
How to Know If Conventional Is Right for You
The best way to know is to run both scenarios side by side with a local lender. At Local Utah Realty, we help buyers compare FHA and conventional options every week so you can see the actual monthly payment difference and total cost over time before you decide.
- 1
Check your credit score. If you are at 680 or above, conventional is worth a serious look. Free options include Credit Karma, Experian, or your bank app.
- 2
Know your down payment. Have at least 3 to 5% saved? That is enough to qualify. Have 10% or more? You may qualify for better rates and lower PMI.
- 3
Calculate your debt to income ratio. Add up all monthly debt payments and divide by your gross monthly income. Aim for 45% or below for conventional.
- 4
Talk to a local lender. Ask them to quote both FHA and conventional so you can compare the full picture including rate, monthly payment, and total mortgage insurance paid over time.
- 5
Get pre-approved. Weber County sellers expect a pre-approval letter with every offer. Get yours before you start touring so you are ready to move fast when you find the right home.
Wasatch Front Regional MLS - Salt Lake Board of REALTORS® All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties
