FHA Loans vs. Conventional Loans: Which Is Right For You? Loan Types | If you’re house hunting, you’ve probably come across two popular types of home loan options:FHA loansConventional loans The biggest difference between these two options is that FHA loans are insured by the Federal Housing Administration, whereas conventional loans are insured by private lenders. FHA loans are generally more lenient when it comes to your financial qualifications. For that reason, some people assume FHA loans are always best