Nine times out of 10 – when a buyer is qualified – I find that lenders put them into more stringent FHA loans rather than Conventional.  Money saved through the interest rate is always always the factor, though conventional can sometimes be less strenuous to get.

Seeing the two good faith estimates side-by-side from a lender is the best way to understand why an FHA mortgage trumps Conventional.  The self-described FHA Expert Jeff Belonger over at ActiveRain clearly demonstrated the side-by-side using 5 percent down,

To compound this, so many said just because you had a conventional loan, you had the better loan. This was not always true when putting 3 percent down. In most cases, you were told this, because that particular lender was not FHA approved. Now?  Even with 10% down and credit scores less than 680, FHA loans in most cases, will be the best mortgage for you.

And he has a picture to prove it!

Jeff has a very informative site that I encourage you to visit!