Best Mortgage With a 640 Credit Score and 5% Down: FHA or Conventional?
What's the best mortgage with a 640 credit score and 5% down? Today it's FHA: about $41,639 less than conventional over 10 years.
You have a 640 credit score and 5% down on a $375,000 home in Virginia. You qualify for both FHA and conventional. Most lenders steer you toward whichever one they prefer. Here are both, priced on today's rates, with the math done for you.
The numbers
Side by side, priced today
640 credit · 5% down · $375,000 home · priced todayRates as of October 15, 2026
30-year fixed
FHA
Rate
6.375%
APR
7.412%
- Payment (principal & interest)
- $2,261
- Mortgage insurance
- $148/mo
- Points
- 2.03 · $7,232
- Closing costs
- $17,040
- Down payment
- $18,750
- Total loan amount
- $362,484
- Cash to close
- $35,790
30-year fixed
Conventional
Rate
7.375%
APR
8.425%
- Payment (principal & interest)
- $2,461
- Mortgage insurance
- $282/mo
- Points
- 1.98 · $7,054
- Closing costs
- $16,736
- Down payment
- $18,750
- Total loan amount
- $356,250
- Cash to close
- $35,486
FHA saves
$333/mo
on your monthly payment vs Conventional
FHA saves
$41,639
in total costs over 10 years
Conventional saves
$304
in cash at closing
30-year fixed purchase, single-family primary residence, Virginia. The rate, points and lender costs are Mable’s, and we stand behind them. Title, local taxes, insurance and other third-party costs are county-level estimates, and they’re the same whichever loan you choose.
The math
What the difference really costs you
- Monthly payment. FHA is $2,800 a month and conventional is $3,133, including taxes and insurance. That's $333 a month in FHA's favor.
- Up front. FHA adds a $6,234 upfront mortgage insurance premium, rolled into the loan so you don't pay it in cash. Cash to close is $35,790 with FHA and $35,486 with conventional, close to a wash.
- Over time. Counting closing costs, interest and mortgage insurance, conventional costs less at first. FHA pulls ahead after 1.4 years and is $41,639 cheaper after 10 years.
- Mortgage insurance. FHA mortgage insurance stays for the life of the loan. Conventional mortgage insurance ends after about 12.2 years.
Run your own numbers
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Pros and cons
For this scenario, not in general
FHA
- Rate is 1% lower than conventional at a 640 score.
- Mortgage insurance costs the same at any credit score.
- The seller can pay up to 6% of the price toward your closing costs.
- A $6,234 upfront mortgage insurance premium is added to your loan.
- At 5% down, mortgage insurance never comes off. Removing it means refinancing later.
- The appraisal checks the home's condition more strictly.
Conventional
- Mortgage insurance drops off on its own after about 12.2 years, sooner if you ask once you reach 20% equity.
- No upfront mortgage insurance fee.
- Mortgage insurance is priced on your credit: $282 a month here vs $148 on FHA.
- The seller can only pay 3% of the price toward closing costs under 10% down.
- Rate is 1% higher than FHA at this score.
Our take
What we’d do
FHA. At 640 credit with 5% down, it's the better loan whether you keep it 5 years or 10.
We'd take FHA here, with a plan: once your home has 20% equity, look at refinancing to conventional to drop the mortgage insurance for good. We'll watch rates for you and tell you when it makes sense. Either way, we price both for your exact numbers before you decide.
How we stack up
Lower rates than Zillow and Rocket
Rates up to
0.626%
lower
Mable
6.499%
Zillow
7.125%
Rocket
6.990%
Up to 0.626% lower rate
Mable
6.750%
Zillow
7.000%
Rocket
6.990%
Up to 0.25% lower rate
Mable
7.250%
Zillow
7.490%
Rocket
7.625%
Up to 0.375% lower rate
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Reviewed by Andrew D'Amato — President & Mortgage Expert · NMLS #1289793