Soft magnetic composites (SMC) based on FeSiB amorphous alloys have been widely used in various electric devices. However, the amorphous powders are difficult to press, and the prepared cores exhibit low mechanical strength with high porosity. In this work, untreated and phosphated Fe powders with mean particle size of 70 μm were added into FeSiB powders with mean size of less than 25 μm to improve the performance of the SMC. The FeSiB/Fe SMCs are fabricated by cold pressing. The results show that the amplitude permeability of FeSiB/Fe SMCs increases with the increase of Fe content. However, the addition of untreated Fe powder leads to increased magnetic loss. On the contrary, the addition of phosphated iron powder can not only enhance the amplitude permeability but also effectively reduce the core loss. Hence, the addition of phosphated iron powder provides a good way to modify the soft magnetic properties of FeSiB/Fe SMC for AC application.