FHA vs. conventional loans in Oklahoma: limits, mortgage insurance and a $300,000 example

FHA or conventional: how do they differ?

Both let you buy with a small down payment. Both charge for mortgage insurance when you do. The differences are in the credit rules, what the insurance costs and how long you pay it. Here they are side by side, from HUD's handbook and Fannie Mae's guide.

One-unit homes you'll live in, 30-year terms. Each row is explained below with its source.

Worth knowing: This guide sums up HUD's Handbook 4000.1, Fannie Mae's Selling Guide and the other sources below as of Oct 20, 2026. Lenders can add their own rules on top, so ask yours what applies to you.

What are the 2026 loan limits in Oklahoma?

They're the same in all 77 counties. HUD's 2026 FHA limit for a one-unit home is $541,287 everywhere in the state, the national floor (HUD). FHFA's conforming limit is $832,750 in every county (FHFA).

The FHA limit applies before the upfront premium. HUD says “The UFMIP is not considered when calculating the area-based Nationwide Mortgage Limits and LTV limits.” So with 3.5% down, FHA reaches up to about a $560,919 price. Above that, FHA needs more down, and conventional has room to spare.

There's a side effect for FHA's monthly premium. HUD's rates are lower for base loans at or under the national conforming baseline, $832,750 in 2026 (HUD ML 2023-05). Oklahoma's FHA limit is under that, so every FHA loan here gets the lower rates.

How does FHA's MIP compare with PMI?

FHA charges two premiums. The upfront one is 175 basis points, or 1.75% of the base loan. “The UFMIP must be entirely financed into the Mortgage or paid entirely in cash.” Then there's an annual premium, paid monthly. For a 30-year loan in Oklahoma, it depends on the down payment (HUD):

• Under 5% down: 0.55% a year, for the mortgage term.
• At least 5% but under 10% down: 0.50% a year, for the mortgage term.
• 10% or more down: 0.50% a year, for 11 years.

Conventional loans use private mortgage insurance. Freddie Mac says it's “required if you make a down payment less than 20%”. It doesn't publish a rate table. It gives a rough range of $30 to $70 a month per $100,000 borrowed (Freddie Mac). Our calculators use the midpoint.

The big difference is the end date. Freddie Mac: “Once you've built equity of 20% in your home, you can cancel your PMI and remove that expense from your monthly payment.” If you're current on payments, PMI stops by itself when the balance is scheduled to reach 78% of the original value. And Freddie Mac notes PMI “can be cancelled from your payment once you reach 20% equity in your home for conventional loans, but not FHA loans”.

What are the down payment and credit rules?

FHA: HUD requires a minimum investment “of at least 3.5 percent of the Adjusted Value”. Your credit score decides how much you can borrow. HUD's table reads “at or above 580 eligible for maximum financing between 500 and 579 limited to a maximum LTV of 90%” (HUD Handbook 4000.1). So with a score from 500 to 579, plan on 10% down.

Conventional: Fannie Mae's HomeReady and Freddie Mac's Home Possible both start at 3% down (Fannie Mae, Freddie Mac). Home Possible has an income cap of 80% of area median. For credit, Fannie Mae's guide says “A minimum credit score is not required for DU loan casefiles.” DU is its automated underwriting system. For loans approved by hand, the minimum is 620 on a fixed rate (Fannie Mae B3-5.1-01).

No minimum doesn't mean credit doesn't matter. “Loan-level price adjustments (LLPAs) are assessed based on the representative credit score for the loan, in addition to other eligibility and loan features.” Those adjustments show up in your rate or points. HUD's premium table, by contrast, has no credit score column. It's set by loan term, loan size and down payment.

Worked example: a $300,000 house in Oklahoma City

Here's one $300,000 house in Oklahoma City, district code 200, financed five ways (an example you can change in the calculator). Every loan uses Freddie Mac's 30-year average for the week of Oct 15, 2026, 7.40%, so the insurance is the only difference. Real FHA and conventional quotes will differ from it and from each other.

Totals include property tax with the homestead exemption ($327.73 a month) and Oklahoma's average insurance ($441.50). The FHA loan amounts include the financed upfront premium. PMI's end year is when the scheduled balance reaches 78% of the price.

At the low down payments, the two are close. FHA with 3.5% down comes to $2,941.44 a month. Conventional with 3% down is $2,929.56 with our PMI estimate. But the PMI quote decides it. Across Freddie Mac's range, that payment runs from $2,871.36 to $2,987.76.

Time decides it too. In this example the conventional PMI drops off in year 13. The FHA premium keeps going for all 30 years, unless you refinance or sell. With 10% down, PMI ends in year 10 and FHA's MIP after 11 years.

Cash at closing differs a little, too. On the closing costs guide's assumptions, before lender and title fees, the FHA loan needs $18,531.87 and the 3% conventional loan $17,017.43. The gap is mostly the half-point difference in the down payment.

What it does to your price range

The affordability calculator starts with a buyer earning $85,000 a year, with $400 a month of other debts and $20,000 to put down. At the 28/36 rule of thumb, that buyer tops out around $218,313 conventional or $217,551 FHA. Nearly the same.

FHA's own ratios can be looser. For loans approved by hand, HUD's table starts at “580 and above 31/43 No compensating factors required.” (HUD). At 31/43 the same buyer reaches $239,126. A bigger payment is a bigger stretch, though, so check the monthly number before you lean on it.

Pairing either loan with OHFA GOLD or DREAM

The Oklahoma Housing Finance Agency's GOLD and DREAM programs come in both flavors. The government version sits on an FHA, VA or USDA loan. The conventional version is Freddie Mac's HFA Advantage. Both pay assistance of 3.5% of the total loan amount as a silent second mortgage (OHFA lender training).

On Oct 20, 2026, OHFA posted GOLD Government at 7.000% and GOLD Freddie HFA Advantage at 7.125% (OHFA). On our example house:

• FHA with GOLD: $2,861.68 a month. The assistance is $10,309.82, which leaves $190.18 of the $10,500 down payment for you (calculator).
• Freddie Mac with GOLD: $2,875.25 a month with our PMI estimate. The assistance is $10,185.00, which covers the $9,000 down payment with $1,185.00 to spare (calculator). OHFA calls it down payment and/or closing cost assistance.

OHFA's own credit rules are stricter than HUD's. Its training lists a 640 minimum score for FHA and 640 for HFA Advantage. The debt limit is 45% on FHA at 640–679, and 50% on HFA Advantage. GOLD has a price limit of $349,525 ($427,198 in targeted areas). DREAM's government version has one of $356,362.

The OHFA check compares your income and price with those limits. Our low down payment guide covers the rest: first-time buyer rules, recapture and the other programs.

Which one fits?

It comes down to a few questions, all from the numbers above:

• Your credit score. Below 620, a Fannie Mae loan needs its automated approval. FHA's table goes down to 500, with more down. Higher up, get a PMI quote. It can swing the payment by $116 a month here.
• How long you'll keep the loan. FHA's premium lasts the whole term with under 10% down. PMI ended in year 13 in our example.
• Your price. Over about $560,919, FHA's Oklahoma limit needs a bigger down payment.
• Seller help. FHA allows up to 6% of the price. Conventional allows 3% with under 10% down. The closing costs guide has the details.

Ask two lenders for a Loan Estimate on each, same day, same price. Then put the rates and the PMI quote into the mortgage calculator.

Run your own numbers

• Mortgage payment: Your monthly payment with Oklahoma tax and insurance, PMI, HOA and the amortization schedule.
• Affordability: How much house your income covers once Oklahoma tax and insurance are in.
• OHFA GOLD & DREAM: See if your income and price fit under OHFA's limits for your county.

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