The choice between an FHA loan and a conventional loan can swing your total housing cost by tens of thousands of dollars over 30 years — and the answer depends on your credit score, down payment, and how long you’ll keep the loan. This free FHA vs conventional loan calculator runs both side-by-side, including mortgage insurance, upfront fees, and the lifetime PMI/MIP differences, so you can see exactly which loan saves you more.
FHA vs Conventional Loan Calculator
Compare monthly costs, total interest, and mortgage insurance side-by-side.
Recommendation
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Adjust inputs to see which loan saves you more.
FHA Loan
3.5% down · 6.25% rate
Eligibility: OK
Conventional Loan
5% down · 6.50% rate
Eligibility: OK
Monthly payment over time
FHA MIP stays for the life of the loan when down payment is under 10%. Conventional PMI drops when you hit 22% equity.
Estimates only. Actual rates and PMI/MIP costs depend on your specific lender, credit profile, and loan program. FHA and conventional pricing changes — verify with a licensed loan officer before locking. Not financial advice.
How to use this calculator
Follow these steps to get a personalized FHA vs conventional comparison:
- Enter the home price. Use the contract price or your best estimate.
- Set your down payment percentage. FHA minimum is 3.5%, conventional minimum is 3%. The calculator runs each loan at the appropriate minimum if your input is below it.
- Choose your loan term. 30-year fixed is the most common; 15-year fixed dramatically lowers total interest but raises the monthly payment.
- Select your credit score tier. Both rates and conventional PMI cost depend heavily on credit. Conventional loans usually require 620+; FHA accepts down to 580 with 3.5% down.
- Adjust the rates if you have a real quote. The calculator auto-suggests typical 2026 rates per credit tier. If a lender has given you a Loan Estimate, plug in those rates instead.
- Compare the cards. Each card shows monthly payment, P&I, mortgage insurance, lifetime cost, and how long PMI or MIP lasts. The verdict block above the cards tells you which option saves more over the full loan.
What’s the difference between FHA and conventional loans?
Both are 30-year (or 15/20-year) fixed-rate mortgages used to buy a home, but the rules behind them are different.
A conventional loan is any mortgage not insured by a US government agency. Most conventional loans conform to the standards set by Fannie Mae and Freddie Mac (which is why you’ll hear them called “conforming loans”). They’re priced based on credit risk — your credit score, down payment, and debt-to-income ratio drive both your interest rate and your private mortgage insurance (PMI) cost.
An FHA loan is a conventional-style mortgage that’s insured by the Federal Housing Administration. Because the federal government backs the loan against default, lenders accept lower credit scores (down to 580 with 3.5% down, or 500 with 10% down) and offer more forgiving underwriting on debt-to-income and recent credit events. The trade-off: every FHA borrower pays mortgage insurance, regardless of down payment size, and the way that insurance is priced often makes FHA more expensive long-term for buyers with strong credit.
Mortgage insurance — the biggest cost difference
This is where FHA and conventional diverge most.
FHA mortgage insurance: UFMIP + MIP
FHA charges two mortgage insurance fees:
- Upfront Mortgage Insurance Premium (UFMIP) — 1.75% of the loan amount, paid at closing. Most buyers finance it into the loan rather than paying out of pocket, but either way it counts. On a $385,500 loan, that’s $6,746 added to your balance.
- Annual Mortgage Insurance Premium (MIP) — 0.55% of the loan balance annually (for 2023+ originations), divided into 12 monthly payments. On the same $385,500 loan, that’s $176/month at the start, declining as the balance shrinks.
The critical FHA gotcha: if your down payment is under 10%, MIP stays for the life of the loan. You only escape MIP by refinancing into a conventional loan (which usually requires building up to 20% equity through appreciation + paydown). With 10%+ down, FHA MIP drops off after 11 years (132 months).
Conventional mortgage insurance: PMI
Conventional loans with under 20% down require Private Mortgage Insurance (PMI). PMI is paid monthly to a third-party insurer (MGIC, Genworth, Radian, etc.), and the rate depends on your credit score, loan-to-value ratio, and the insurer’s pricing tier. Typical 2026 PMI rates:
- 780+ credit, 95% LTV: ~0.30%/year
- 740 credit, 95% LTV: ~0.40%/year
- 700 credit, 95% LTV: ~0.60%/year
- 660 credit, 95% LTV: ~0.95%/year
- 620 credit, 95% LTV: ~1.50%/year
The key advantage of conventional: PMI drops off automatically when your loan-to-value reaches 78% (per the federal Homeowners Protection Act of 1998), and you can request earlier termination at 80% LTV with a home appraisal. In practice, that’s typically 5–10 years into the loan, depending on appreciation and your monthly payment size.
When FHA wins
FHA loans are usually the right choice in these situations:
Low or rebuilding credit (below 680)
If your credit score is under 680, conventional PMI gets expensive fast. At 620 credit, you might pay 1.50% annually for PMI — nearly 3× the FHA MIP rate. The calculator will show FHA winning by tens of thousands over the loan’s life in these scenarios.
Small down payment (3.5–10%)
FHA’s 3.5% minimum down is well-suited to first-time buyers. Combined with FHA’s more forgiving underwriting on debt-to-income and recent credit events, it’s often the only path forward when you’re tight on cash.
Recent credit issues
FHA waiting periods after bankruptcy (2 years post-Chapter 7), foreclosure (3 years), or short sale (3 years) are shorter than conventional. If you had a financial setback in the last 4 years, FHA may be the only available door.
High debt-to-income ratio
FHA allows DTI ratios up to 56.99% with compensating factors, versus 45–50% typical for conventional. Buyers with student loans or other significant debt often qualify for more home through FHA.
When conventional wins
Conventional loans usually save money in these situations:
Good credit (700+) with 5%+ down
Once your credit crosses 700, conventional PMI becomes cheap enough that the FHA MIP penalty doesn’t pay off. The PMI also drops off automatically when you hit 22% equity — typically year 5–10 — saving you tens of thousands compared to FHA MIP that persists for life.
Down payment 20% or more
If you’re putting down 20%+, conventional has no PMI at all. FHA still charges UFMIP and ongoing MIP regardless of down payment, so FHA is almost always more expensive at 20%+ down. Choose conventional.
High home price
FHA loan limits are county-specific but max out at $1,149,825 (2024) in the highest-cost counties — and many counties cap much lower. Conventional conforming limit is $766,550 baseline / $1,149,825 in high-cost areas. Above conforming limits, you’re in jumbo conventional territory.
Investment or second-home properties
FHA loans require owner-occupancy. For a rental or vacation home, conventional is your only mainstream option.
How to read the calculator’s verdict
The “Recommendation” block at the top of the results uses total cost of loan over the full term as the deciding metric. This includes:
- Down payment cash out of pocket
- All P&I payments
- All PMI/MIP payments
- For FHA: the upfront MIP financed into the loan, which becomes part of the principal you pay interest on
It doesn’t include appreciation, opportunity cost on the down payment, or refinance scenarios — those are handled by our rent vs buy calculator. This calculator answers a narrower question: assuming you keep the loan, which option costs less?
How to lower your costs on either option
Once you’ve picked your loan type, there are still levers that reduce total cost:
- Shop three lenders. FHA loans are originated by approved private lenders, who set their own rate and origination fees. Conventional rates also vary by lender. A 0.25% rate difference on a $385K loan saves ~$22,000 over 30 years.
- Improve credit before applying. Even a 20-point credit-score bump can drop your rate and your PMI tier. Pull your reports 60 days before applying and dispute any errors.
- Increase the down payment if it crosses a threshold. Going from 5% to 10% on FHA shortens MIP from “life of loan” to “11 years.” Going from 19% to 20% on conventional eliminates PMI entirely.
- For FHA, refinance to conventional once you have 20% equity. This is the single biggest move for FHA borrowers who got into the home with under 10% down. Once appreciation + paydown gets you to 20% equity, a conventional refinance eliminates MIP for the rest of the loan.
- Consider a 15-year loan if you can afford the payment. Total interest paid drops by more than 60% versus 30-year. Both FHA and conventional offer 15-year options.
Frequently asked questions
Can I switch from FHA to conventional later?
Yes — this is one of the most common mortgage moves. Once your home has appreciated enough (or you’ve paid down the principal enough) to give you 20% equity, you can refinance into a conventional loan and eliminate MIP. The refinance has its own closing costs, so make sure the math works after fees.
Does FHA have higher or lower interest rates than conventional?
Slightly lower, usually 0.10–0.30% below conventional for the same credit profile. This is because the federal guarantee reduces lender risk. But the MIP often more than offsets the rate savings, which is why this calculator looks at total cost rather than rate alone.
Can I get an FHA loan with bad credit?
FHA accepts credit scores as low as 500 (with 10% down) or 580 (with 3.5% down). However, individual lenders set their own overlays — most large lenders require 620+ regardless of the FHA minimum. Smaller community banks and credit unions often go closer to the federal floor.
What’s the FHA loan limit in my area?
FHA loan limits are set per county and range from $498,257 (baseline) to $1,149,825 (high-cost areas) in 2024. The 2025 and 2026 limits typically rise 5–7% annually. Look up your county at HUD’s online tool to confirm.
Are FHA loans only for first-time buyers?
No. FHA loans are open to any qualifying buyer using the home as a primary residence. The “first-time buyer” association comes from the program’s appeal to lower down payments and credit-friendly underwriting, not a formal eligibility rule.
What’s the difference between PMI and MIP?
PMI (private mortgage insurance) is on conventional loans, paid to a private insurer, and drops off automatically at 78% LTV. MIP (mortgage insurance premium) is on FHA loans, paid to HUD, and either drops off at 11 years (with 10%+ down) or stays for life (with under 10% down). MIP is generally less flexible.
Do FHA loans require a home inspection?
No, but FHA does require an FHA-specific appraisal that confirms the home meets HUD’s Minimum Property Standards (no peeling paint on pre-1978 homes, working systems, no obvious safety hazards). The appraisal is functionally similar to a basic inspection but is required by FHA — you should still hire your own independent home inspector for a thorough look.
Can the seller pay my FHA closing costs?
Yes, up to 6% of the purchase price. Conventional allows 3% if your down payment is under 10%, 6% from 10–24% down, and 9% at 25%+ down. Both programs let sellers cover origination, title, escrows, prepaid taxes/insurance, and discount points up to those caps.
Methodology and sources
Mortgage insurance percentages are sourced from the HUD Single Family Housing Policy Handbook 4000.1 (FHA UFMIP 1.75%, annual MIP 0.55% for 30-year loans with LTV > 95% per the March 2023 update) and from MGIC, Genworth, and Radian PMI rate cards for 2025-2026 origination. Conventional PMI cancellation rules follow the federal Homeowners Protection Act of 1998 automatic-termination provision at 78% LTV. Mortgage rates by credit tier use typical conforming and FHA pricing add-ons from Freddie Mac’s Primary Mortgage Market Survey Q1 2026 averages combined with the FNMA Loan-Level Price Adjustment matrix. The amortization math uses the standard formula published in CFPB Truth in Lending disclosures. Where FHA MIP recalculates annually based on the previous year’s average balance, this calculator approximates with monthly recalculation — the difference is under $50 over the loan’s life. FHA loan limits referenced are 2024 floor and ceiling; check HUD’s published limits for your specific county before finalizing.
Reviewed by the CalcCottage editorial team. Updated May 13, 2026.