Last updated: October 29, 2026
Short answer: It depends on your credit, savings and plans. FHA works with credit scores as low as 500, with HUD's maximum financing starting at 580, but its mortgage insurance can last the life of the loan. Conventional mortgage insurance can come off as you pay the loan down. Then browse our Avondale home search.
Key takeaways
- 2026 one-unit loan limits in Maricopa County: $557,750 for FHA and $832,750 for conventional conforming loans (HUD and FHFA).
- FHA: a credit score of 580 or higher is eligible for HUD's maximum financing. From 500 to 579, HUD lowers how much you can borrow. Below 500 isn't eligible.
- FHA mortgage insurance has an upfront premium of 1.75% of the base loan plus an annual premium. If the loan starts above 90% of the home's value, the annual premium lasts for the life of the loan.
- Conventional private mortgage insurance (PMI): you can ask to cancel it when your balance reaches 80% of the home's original value, and it generally ends automatically at 78%.
¡Qué tal! I'm Rosie Armenta. When buyers sit down with Mariela and me, one of the first money questions is whether to go FHA or conventional. There isn't one right answer for everyone. The better loan is the one that fits your credit, your savings and your plans. Here's how the two compare using the official 2026 numbers, so you can walk into your lender meeting with good questions.
What's the difference between an FHA and a conventional loan?
An FHA loan is insured by the Federal Housing Administration, part of HUD. That insurance lets lenders work with lower credit scores, and you pay for it through FHA mortgage insurance. A conventional loan isn't insured by the government. When it stays under the conforming loan limit, it can be sold to Fannie Mae or Freddie Mac, and it follows their rules.
Both loans are for buying a home you'll live in, both can be paired with down payment assistance, and both have a minimum amount you put in yourself. With FHA, HUD calls that your minimum required investment. A licensed lender of your choice can tell you the exact amount for your loan.
What credit score do I need for FHA or conventional?
| Loan | Credit score rule | Source |
|---|---|---|
| FHA | 580 or higher: eligible for maximum financing. 500 to 579: HUD limits the loan amount, so you put in more. Below 500: not eligible | HUD Mortgagee Letter 2026-11 |
| Conventional (Fannie Mae) | Loans run through Fannie Mae's Desktop Underwriter don't have a set minimum score. Manually underwritten fixed-rate loans need at least 620 | Fannie Mae Selling Guide B3-5.1-01 |
| Down payment assistance on top | Home Plus needs 620. Home in Five Advantage needs 640 | Arizona IDA; Home in Five Advantage |
Sources checked October 29, 2026. Lenders can set stricter rules of their own, so ask yours.
Here's something new for buyers who pay their bills on time but have a thin credit file. HUD Mortgagee Letter 2026-11 says that for FHA case numbers assigned on or after January 1, 2027, lenders may use FICO 10T and VantageScore 4.0 alongside Classic FICO. HUD says these models can use trended data and non-traditional credit like rent and utilities. The minimum score thresholds stay the same.
How much can I borrow in Maricopa County in 2026?
| 2026 limit, Maricopa County | One unit | Two units |
|---|---|---|
| FHA forward mortgage limit (HUD) | $557,750 | $714,000 |
| Conforming loan limit for Fannie Mae and Freddie Mac (FHFA) | $832,750 | $1,066,250 |
Sources: HUD 2026 FHA forward mortgage limits file and Mortgagee Letter 2025-23; HUD 2026 GSE limits file and FHFA's 2026 conforming loan limit announcement. Checked October 29, 2026.
These are loan limits, not price limits. They cap how much you can borrow, and they don't tell you what you can afford. If the loan you need is above the FHA limit, a conventional loan may be the better fit.
How does mortgage insurance compare?
| FHA mortgage insurance (MIP) | Conventional PMI | |
|---|---|---|
| Upfront cost | 1.75% of the base loan amount | None required by the program; it depends on how the PMI is set up |
| Yearly cost | HUD's annual MIP. On a loan of 30 years or less but over 15, within the Maricopa County FHA limit, it's 0.50% to 0.55% of the loan per year, depending on how much you borrow compared with the value | Set by the private mortgage insurer, based on your credit and loan. Ask your lender for a quote |
| How long it lasts | 11 years if the loan starts at 90% or less of the value. Otherwise, the life of the loan | You can ask to cancel at 80% of the original value. It generally ends automatically at 78% |
| How to get rid of it sooner | Refinance into a different loan later, if you qualify | Pay the balance down faster, then ask your servicer in writing |
Premiums can change; your Loan Estimate shows yours.
Sources: HUD Mortgagee Letter 2023-05 (current annual MIP schedule; no later MIP letter in HUD's index as of today) and the CFPB's PMI cancellation guide. Checked October 29, 2026.
Here's a made-up example so you can see the FHA math. Say the base loan is $300,000 (a made-up example amount):
| FHA mortgage insurance, made-up $300,000 base loan | Amount |
|---|---|
| Upfront premium: $300,000 × 1.75% | $5,250 |
| Annual premium at 0.55%: $300,000 × 0.55% | About $1,650 for the first year |
| Annual premium at 0.50%: $300,000 × 0.50% | About $1,500 for the first year |
Example amounts are made up and rounded. Your Loan Estimate shows the exact premiums for your loan.
Mortgage insurance is only one piece of the monthly cost. With either loan, you'll also pay principal and interest, property taxes, homeowners insurance, HOA dues if the home has them, plus utilities and upkeep. My guides on property taxes in Avondale and homeowners insurance in Avondale help you fill in those lines.
Which loan fits my situation?
| Your situation | What to ask your lender about |
|---|---|
| Your credit score is under 620 | FHA, since a score of 580 or higher is eligible for HUD's maximum financing |
| You want mortgage insurance to go away on its own | Conventional, since PMI generally ends at 78% of the original value |
| You need to borrow more than $557,750 | Conventional, up to the $832,750 conforming limit |
| You're using down payment assistance | Both can work. Home Plus pairs with FHA, VA, USDA and conventional HFA first mortgages |
| Someone is giving you money toward the purchase | Both allow gifts from acceptable donors. See using gift money for a down payment |
| The seller is offering a credit toward your costs | Both have limits. See how seller concessions work |
The best way to decide is to get a Loan Estimate for each loan type from a licensed lender of your choice and compare them line by line, including the mortgage insurance section and how long it lasts.
Ready to start your search?
Look at homes in your price range on our Avondale home search. If you own a home now and plan to sell first, get a free home value report. Then call or text me at 623-295-5770. Mariela and I will help you plan your search around the loan you choose and keep your purchase on track.
Frequently Asked Questions
What credit score do I need for an FHA loan in Arizona?
HUD's rule is the same in every state. A minimum decision credit score of 580 or higher is eligible for maximum financing. From 500 to 579, HUD limits the loan amount. Below 500, the loan isn't eligible for FHA insurance.
Is FHA or conventional better for first-time buyers?
Neither is better for everyone. FHA can help if your credit score is lower. Conventional can cost less over time if your PMI can come off. Compare Loan Estimates for both from a licensed lender of your choice.
What is the FHA loan limit in Maricopa County for 2026?
HUD's 2026 FHA forward mortgage limit for Maricopa County is $557,750 for a one-unit home and $714,000 for two units, for case numbers assigned on or after January 1, 2026.
What is the conforming loan limit for 2026?
FHFA set the 2026 baseline conforming loan limit at $832,750 for a one-unit home. That's also the limit for Maricopa County in HUD's 2026 GSE limits file.
Can I remove FHA mortgage insurance?
Under HUD's current schedule, annual MIP lasts 11 years if the loan starts at 90% or less of the home's value. If it starts higher, it lasts the life of the loan, and refinancing into a different loan later is the way out, if you qualify.
When does PMI come off a conventional loan?
The CFPB says you can ask your servicer in writing to cancel PMI when your balance reaches 80% of the home's original value, if you're current and meet the other conditions. It generally ends automatically when the balance is scheduled to reach 78%.
Can I use gift money with an FHA or conventional loan?
Yes, from acceptable donors. Fannie Mae allows a gift from a relative and some other close donors for a home you'll live in, with a gift letter and proof of the transfer. FHA also allows gifts from acceptable sources.
Will my rent and utility payments help my FHA credit score?
Starting with FHA case numbers assigned on or after January 1, 2027, HUD lets lenders use FICO 10T and VantageScore 4.0. HUD says these models can use rent and utility payment history. The minimum score rules don't change.
This article is general information, not legal, tax, or financial advice. Please talk with a licensed attorney, CPA, or lender about your situation.
About the authors
Rosie Armenta is a REALTOR® with West USA Realty. She and her daughter, Mariela Armenta, work together as a mother-daughter team. Avondale (85392) is their home base, and they help buyers and sellers across the West Valley in English and Spanish. Call or text 623-295-5770, or get a free home value report.
Rosie Armenta, REALTOR® | West USA Realty | Equal Housing Opportunity
Figures were checked on October 29, 2026, from HUD Mortgagee Letters 2026-11, 2025-23 and 2023-05, HUD's 2026 FHA forward and GSE loan limit files, FHFA's 2026 conforming loan limit announcement, the Fannie Mae Selling Guide (B3-5.1-01 and B3-4.3-04), the CFPB's guide to PMI cancellation, and the Arizona IDA and Home in Five Advantage program pages. The loan amount in the example is made up. Rates, premiums and approval depend on your situation, so a licensed lender of your choice confirms what applies to you.