FHA vs Conventional Loans in Wisconsin 2025 – Which Is Right for You?
If you're buying a home in Wisconsin in 2025, chances are you're deciding between two of the most common mortgage types: FHA loans and conventional loans. Both options can get you into your new home, but the best choice depends on your credit, down payment, and long-term goals. Let's break it down so you can make the right move.
Credit Score Requirements
- FHA Loans: Minimum credit score of 580 with 3.5% down, or as low as 500 with 10% down. FHA loans are designed to be more forgiving if your credit history isn't perfect.
- Conventional Loans: Typically require at least a 620 score, with the best rates reserved for borrowers 740 and higher.
👉 Bottom line: If your credit needs work, FHA financing may be the easier path. If your score is strong, conventional mortgages in Wisconsin usually win with better pricing.
Down Payment Differences
- FHA: Minimum 3.5% down. Gift funds are allowed, making it a solid option for first-time buyers with limited savings.
- Conventional: Minimum 3% down for first-time buyers, 5% for repeat buyers, and 20% to avoid mortgage insurance.
👉 If you've got the savings, conventional helps you sidestep long-term mortgage insurance costs. If not, FHA makes homeownership accessible sooner.
Mortgage Insurance
- FHA: Requires an upfront mortgage insurance premium (UFMIP) and monthly mortgage insurance (MIP). MIP typically lasts for the life of the loan unless you refinance.
- Conventional: Requires private mortgage insurance (PMI) if you put less than 20% down. Unlike FHA, PMI can be removed once you reach 20% equity.
👉 Conventional wins here - PMI can disappear, saving you money over time. You can also explore refinancing later - see my guide on Wisconsin mortgage refinance options in 2025 for details.
Income & Debt-to-Income Ratios
- FHA: More flexible - allows DTIs up to 50%+ with automated approval.
- Conventional: Generally capped at 45% - 50%, with tighter underwriting.
👉 If you have higher monthly obligations, FHA is more likely to approve.
Property Types Eligible
Both FHA and conventional loans cover:
- Single-family homes
- Condos (must be approved for FHA)
- Multi-unit properties (up to 4 units, if you live in one)
Conventional loans add flexibility for second homes and investment properties - something FHA does not allow. For example, Fannie Mae's conventional loan eligibility provides clear guidelines for buyers looking beyond primary residences.
Which Is Right for You?
- Choose FHA if:
✅ Lower credit score
✅ Smaller down payment
✅ Higher debt ratio - Choose Conventional if:
✅ Strong credit profile
✅ Ability to put 5 - 20% down
✅ Long-term savings by removing PMI
Still not sure? That's where my team comes in. We'll run both scenarios side-by-side so you can see which loan saves you the most money in 2025.
Next Steps
Buying a home in Wisconsin? Don't guess - get the facts. My team and I specialize in FHA and conventional loans, and we'll find the best fit for your goals.
📲 Schedule a call
💬 Chat with my 24/7 mortgage assistant
🖥️ Apply online
Let's Connect
📞 Call/Text: 414-976-2654
📧 Email: azeman@uhm.com
🌐 Website: www.mkemortgage.com
👤 Adam Zeman - NMLS #870441 | Union Home Mortgage