The 2026 FHA loan limit in Montgomery County is $1,149,825 — below Bethesda's $1.35M median, making FHA unavailable for most Bethesda purchases. Conventional loans start at 3% down with 620+ credit. FHA offers 3.5% down with 580+ credit but requires mortgage insurance for the life of the loan (vs. cancellable PMI on conventional). At MoCo price levels, most buyers with good credit choose conventional.
FHA vs Conventional Loan: Which Is Right for Bethesda Buyers?
TL;DR: The 2026 FHA loan limit in Montgomery County is $1,149,825 — but Bethesda's median home price is $1.35M, meaning most purchases exceed the FHA cap. For buyers in range of FHA limits, the key differences are: FHA requires MIP for the life of the loan (0.55%–0.85%/year), while conventional PMI cancels at 20% equity. Conventional loans also have no condition requirements on the property — FHA appraisals fail properties that need work.
2026 loan limits in Montgomery County
- FHA loan limit (MoCo 2026): $1,149,825 (max loan amount, not purchase price)
- Conventional conforming limit (MoCo 2026): $1,209,750
- Bethesda median price: ~$1.35M → most purchases exceed both limits = jumbo required
- North Bethesda median: ~$779K → both FHA and conventional available
Down payment comparison
- FHA: 3.5% down with 580+ credit score. 10% down required with 500–579 credit.
- Conventional: 3% down (Fannie Mae HomeReady/Freddie Mac Home Possible) with 620+ credit. Standard conventional starts at 5% down.
- PMI threshold: Both programs require mortgage insurance when the down payment is less than 20%.
The mortgage insurance difference — and why it matters
This is the most important distinction for Bethesda buyers:
- FHA Mortgage Insurance Premium (MIP): Upfront 1.75% of loan amount at closing, PLUS annual premium of 0.55%–0.85% for the life of the loan if you put down less than 10%. You cannot cancel FHA MIP — you must refinance out of the FHA loan entirely.
- Conventional PMI: No upfront premium. Annual cost of 0.3%–1.5% depending on credit and down payment. Cancels automatically at 80% LTV (or by request at 78% LTV under HOPA).
On a $700K North Bethesda home with 5% down: FHA MIP adds roughly $4,200/year permanently until refinance. Conventional PMI cancels once you hit 20% equity — typically 7–10 years at normal appreciation. The long-term cost of FHA MIP often exceeds any rate advantage.
Property condition requirements
FHA has strict property condition requirements that conventional loans don't. The FHA appraisal serves as both a value assessment and a safety inspection. Properties with peeling paint (pre-1978 homes), missing handrails, broken windows, roof damage, non-functional HVAC, or other health/safety issues will fail FHA appraisal. Sellers of older Bethesda and North Bethesda homes often prefer not to deal with the risk of an FHA-related condition failure.
Who should use FHA in the Bethesda market?
FHA makes the most sense for buyers in North Bethesda, Wheaton, or Silver Spring (below the FHA limit) with 580–620 credit scores who can't qualify for conventional. For buyers with 620+ credit and 5%+ down in the Bethesda area, conventional almost always wins on total cost.