Trying to choose between a conventional or FHA loan for a home in Herriman? You are not alone. As prices and programs change, the right loan can save you money and stress. In this guide, you will learn the key differences, how each option fits common Herriman price points, and a simple plan to compare your numbers with confidence. Let’s dive in.
FHA vs. conventional at a glance
| Topic | FHA | Conventional |
|---|---|---|
| Minimum down payment | 3.5% with 580+ credit score; 10% with 500–579 | As low as 3% for eligible first-time or low-income buyers (HomeReady/Home Possible); many buyers use 5%–20% |
| Mortgage insurance | Upfront mortgage insurance premium (UFMIP) typically 1.75% financed into the loan, plus annual MIP paid monthly; MIP can be required for the life of the loan depending on LTV and timing | Private mortgage insurance (PMI) until you reach 80% loan-to-value; can be cancelled at 80% (borrower request) and auto-terminates at 78% if current |
| Credit and underwriting | More flexible for lower credit scores and higher DTIs | Usually needs stronger credit (many lenders want 620+); better pricing with higher scores |
| Appraisal and property standards | Requires safety, security, and soundness; repairs may be required before closing | Focuses on value; fewer mandatory repairs unless habitability is affected |
| Loan limits and condos | FHA county limits apply; condos need FHA project approval or spot approval | Conforming limits apply; condos must meet investor guidelines |
- FHA details are set by HUD. You can learn more about FHA mortgage insurance on HUD’s FHA program pages.
- Conventional PMI cancellation rules come from the Consumer Financial Protection Bureau’s Homeowners Protection Act guidance.
- First-time 3% down conventional options include Fannie Mae HomeReady and Freddie Mac Home Possible.
What this means in Herriman
Herriman is growing quickly with many new-construction neighborhoods, HOAs, and a strong share of owner-occupied single-family homes. That mix makes both FHA and conventional loans useful, depending on your budget and the home’s condition.
- For entry-level condos, townhomes, or smaller resales, FHA’s lower down payment and flexible credit can help you qualify.
- For typical single-family homes, a 3% conventional program can compete with FHA. Your time horizon and PMI vs. MIP costs often decide the winner.
- For higher-priced homes above FHA or conforming limits, you will look at conventional jumbo options.
If you are targeting a condo or HOA community, ask your lender early about project approval and fees. HOA assessments affect your monthly payment and loan qualifying.
Down payment and insurance costs
FHA: UFMIP and monthly MIP
With FHA, you put at least 3.5% down if your credit score is 580 or higher. FHA also charges an upfront mortgage insurance premium, commonly 1.75% of the loan amount, which is usually financed into the loan. In addition, you pay an annual mortgage insurance premium each month.
Depending on your down payment and when the loan is originated, FHA’s monthly MIP can be required for the life of the loan. Review current policy details directly with your lender and on HUD’s FHA resources.
Conventional: PMI you can remove
Conventional loans may allow just 3% down for eligible first-time or low-income buyers through programs like HomeReady and Home Possible. You will pay PMI if you put less than 20% down. PMI rates vary by your credit, down payment, and loan factors, and can range widely.
The good news is PMI can usually be removed once you reach 80% loan-to-value by request, and it must drop off automatically at 78% if you are current, under the Homeowners Protection Act.
Appraisals and property condition in Herriman
FHA appraisal: stricter repairs and timing
FHA appraisals check safety, security, and soundness. In the Salt Lake Valley, common FHA repair items include roof concerns, drainage or moisture issues, exposed electrical hazards, and non-functioning HVAC or water systems. New construction usually passes if built to code, but punch-list items that affect habitability must be finished before closing. Repairs can slow your timeline if a re-inspection is needed.
Conventional appraisal: value first, repairs negotiable
Conventional appraisals focus on market value. Condition still matters, but minor issues are less likely to trigger a mandatory repair. If the appraised value comes in low or condition impacts value, you typically renegotiate rather than face required fixes, unless the issue affects safety or long-term soundness.
Loan limits and property types
Both FHA and conventional loans have county-based limits. Herriman is in Salt Lake County, so check current limits before you shop:
- Conforming conventional limits are posted by the Federal Housing Finance Agency.
- FHA county limits and policy updates are available from HUD.
If you plan to buy a condo or townhome, confirm early whether the project is approved for FHA or meets conventional investor guidelines. This can affect both your loan choice and your closing timeline.
Quick cost snapshots for Herriman buyers
These examples use simple math to show how costs compare. They are illustrative only. Your rates, insurance, and taxes will vary.
- Price: 450,000
- FHA with 3.5% down: down payment 15,750. Typical UFMIP at 1.75% is about 7,875, often financed into the loan. You will also pay monthly MIP.
- Conventional with 3% down: down payment 13,500. You will pay PMI monthly until you reach the cancellation threshold. The exact amount depends on your credit and loan features.
- Conventional with 20% down: down payment 90,000. No PMI. Monthly payment is lower, and rates may be better.
When you compare, look at your total monthly cost: principal and interest, PMI or MIP, property taxes, homeowners insurance, and any HOA dues. For FHA, remember that financing UFMIP increases your loan amount and monthly principal and interest.
How to decide what fits you
Ask yourself these questions:
- How strong is your credit today? FHA may be more forgiving if your score is lower, while conventional rewards higher scores with lower costs.
- How long do you expect to own the home? If you plan to sell within a few years and down payment is your main hurdle, FHA can open the door. If you can reach 80% LTV soon, conventional may cost less over time.
- What property type are you considering? Newer single-family homes often breeze through either appraisal, while older homes may require FHA repairs. Condos need project approval.
- What is your tolerance for repairs and timing? If the home needs work, a conventional path might keep the process smoother if the issues are minor.
Step-by-step game plan
Use this quick plan to compare options with clarity.
- Confirm today’s loan limits for Salt Lake County
- Get two pre-approvals
- Talk with at least two lenders: one comfortable with FHA and one with conventional programs like HomeReady or Home Possible. Ask for side-by-side Loan Estimates showing interest rate, APR, UFMIP, MIP, PMI, and total monthly cost.
- Verify condo or HOA eligibility early
- If you are eyeing a condo or townhome in Herriman, ask your lender to confirm project approval and any requirements.
- Anticipate appraisal outcomes
- For FHA, budget for potential repair requests related to safety and habitability and build time for re-inspections if needed.
- Explore down payment help
- Review Utah programs through the Utah Housing Corporation and any Salt Lake County offerings. Ask how assistance pairs with FHA or conventional and what repayment rules apply.
- Model your time horizon
- Compare total costs over your expected ownership period. A slightly higher rate with cancellable PMI could beat a lower rate with lifetime MIP, depending on your plan.
Work with a local guide you can trust
Choosing between FHA and conventional is not one-size-fits-all. Herriman’s mix of new builds, HOAs, and a competitive single-family market means your best option depends on your credit, down payment, property type, and timeline. If you want a calm, step-by-step process and local insight on neighborhoods, pricing, and negotiations, connect with Tricia Vanderkooi. She can help you weigh your options, coordinate with reputable local lenders, and position your offer to win.
FAQs
Which loan is easier to qualify for with lower credit in Herriman?
- FHA generally offers more flexible underwriting for lower credit scores and higher DTIs, while many conventional lenders look for 620+ and price better with stronger scores.
How does PMI cancellation work on conventional loans?
- You can usually request PMI removal at 80% loan-to-value and it must auto-terminate at 78% if you are current, per the Homeowners Protection Act and CFPB guidance.
Can I use an FHA loan for new construction in Herriman?
- Often yes if the home is complete and built to code; FHA appraisals focus on safety and habitability, so any items affecting those must be resolved before closing.
Do HOA fees affect loan approval and payment?
- Yes, HOA dues count toward your monthly debt for qualifying and your total housing cost, so include them when comparing FHA vs. conventional.
What happens if the appraisal finds issues on an FHA loan?
- FHA requires repairs for safety, security, and soundness before closing; this can add time for seller repairs and re-inspection.
Are there assistance programs in Utah for first-time buyers?
- Yes, the Utah Housing Corporation and some local programs may offer down payment or mortgage assistance that can pair with FHA or conventional options, subject to eligibility.
