Common Loan Details

Home Price ($)

Down Payment (%)

Loan Term (years)

FHA Loan

Interest Rate (%) Annual MIP Rate (%) Upfront MIP (%)

Conventional Loan

Interest Rate (%) PMI Rate (% if <20% down) PMI Drops Off (months)

FHA Loan Results

Conventional Loan Results

FHA vs Conventional Loan Comparison Calculator

Q: What is the main difference between FHA and conventional loans?

FHA loans are government-backed and insured by the Federal Housing Administration, making them accessible to buyers with lower credit scores or smaller down payments. Conventional loans are not government-backed and typically require stronger credit but may offer lower total costs for well-qualified buyers.

Q: What credit score do I need for each loan type?

FHA loans are available with credit scores as low as 580 with a 3.5% down payment, or as low as 500 with 10% down. Conventional loans typically require a minimum score of 620, though the best rates go to buyers with scores of 740 or higher.

Q: Does FHA MIP go away like PMI does?

For most FHA loans originated after June 2013 with less than 10% down, the annual MIP remains for the entire loan term. If you put 10% or more down on an FHA loan, MIP cancels after 11 years. This is a key disadvantage compared to conventional PMI, which drops automatically at 80% LTV.

Q: What is the FHA upfront mortgage insurance premium?

The upfront MIP is a one-time fee of 1.75% of the base loan amount, charged at closing on all FHA loans. It can be paid in cash or rolled into the loan balance. Rolling it in increases your loan amount and the interest you pay over time.

Q: Can I refinance from FHA to conventional later?

Yes. Many buyers take an FHA loan initially, build equity, improve their credit score, and then refinance into a conventional loan to eliminate MIP. The right time to do this is when your LTV drops to 80% or below and your credit qualifies for competitive conventional rates.

Q: Which loan is better for a first-time buyer?

It depends on your credit score, down payment, and how long you plan to stay. Buyers with strong credit and 10% or more saved often do better with a conventional loan. Buyers with credit between 580 and 680 or less than 5% saved often benefit more from FHA terms.

Q: Are FHA loan limits the same everywhere?

No. FHA loan limits vary by county and are updated annually. High-cost areas like San Francisco or New York have much higher limits than rural counties. The FHA sets a national floor and ceiling each year based on median home prices.

Q: Does a lower interest rate always make a loan cheaper?

Not always. A lower rate with higher mortgage insurance can cost more than a slightly higher rate with no insurance or lower insurance. That is why this calculator shows the total paid over the full term, not just the interest rate, so you can see the true cost comparison.

What This Calculator Does and Why It Matters

Choosing between an FHA loan and a conventional loan is one of the most important decisions a homebuyer can make. The wrong choice can cost thousands of dollars over the life of a mortgage. This free FHA vs Conventional Loan Comparison Calculator lets you enter your home price, down payment, interest rates, and insurance figures to see a full side-by-side breakdown in seconds.

FHA loans are backed by the Federal Housing Administration and are popular with first-time buyers who have smaller down payments or lower credit scores. Conventional loans follow guidelines set by Fannie Mae and Freddie Mac and often offer better terms for buyers with strong credit. Understanding the real cost difference between the two helps you choose the right product for your situation.

If you are also comparing how your mortgage fits into a broader financial picture, our HELOC vs Home Equity Loan Cost Calculator can help you plan future borrowing needs after purchase.

How to Use This Calculator

Step-by-Step Instructions

Enter the home price you plan to purchase.
Enter your down payment percentage. Below 20% triggers PMI on conventional loans.
Select your loan term — 30, 20, or 15 years.
Fill in the FHA interest rate, annual MIP rate (typically 0.55%), and upfront MIP rate (1.75%).
Fill in the conventional interest rate, estimated PMI rate, and the month at which PMI is expected to drop off.
Click Compare Loans to see the full breakdown.
Review monthly payments, total insurance costs, and total paid over the full term for each loan type.
Use the Reset button to start a new comparison.

The Formula Explained

Breaking Down the Formula

Both loan types use standard amortization to calculate the monthly principal and interest payment. The formula is: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan principal, r is the monthly interest rate, and n is the total number of payments.

For FHA loans, the upfront mortgage insurance premium (UFMIP) is added to the loan balance before amortization. The annual MIP is then divided by 12 and added to each monthly payment. For conventional loans, PMI is added monthly until the loan-to-value ratio drops to 80%, at which point the lender is required to cancel it under the Homeowners Protection Act.

Example Calculation with Real Numbers

Assume a $350,000 home with 5% down ($17,500). The base loan is $332,500. For an FHA loan at 6.75% with 1.75% UFMIP and 0.55% annual MIP: the UFMIP adds $5,819, making the FHA loan balance $338,319. The monthly P&I is approximately $2,195, plus $152 in monthly MIP, totaling about $2,347. A conventional loan at 7.00% on $332,500 with 0.80% PMI gives a monthly P&I of about $2,213, plus $221 in PMI, totaling $2,434 initially — but PMI eventually drops, reducing long-term cost.

When Would You Use This

Real Life Use Cases

This calculator is most useful when you are actively shopping for a mortgage and have received rate quotes from lenders for both loan types. It is also helpful when a mortgage broker presents you with two different options and you want to verify the numbers yourself before committing.

Buyers with credit scores between 580 and 680 often qualify for better rates on FHA loans than conventional loans, making the FHA path cheaper despite the MIP. Buyers with scores above 720 and down payments of 10% or more may find conventional loans cheaper overall once PMI is cancelled.

Specific Example Scenario

A first-time buyer in Texas has saved $20,000 for a $380,000 home — about 5.3% down. Their credit score is 640. An FHA lender offers 6.80% and a conventional lender offers 7.50%. Running both through this calculator shows the FHA loan saves over $400 per month initially, and the total MIP paid is still less than the higher interest cost on the conventional loan over 30 years. This is exactly the scenario where this tool adds real value.

For buyers evaluating mortgage options alongside other real estate costs, the Closing Costs Estimator by State Calculator is a useful companion tool to understand the full upfront picture.

Tips for Getting Accurate Results

Use Actual Lender Quotes for Interest Rates

Do not use national average rates from news sources. Get real Loan Estimates from at least two lenders for each loan type. Rates vary by credit score, loan size, and lender. Plugging in real quotes gives you results that reflect your actual situation, not a hypothetical scenario.

Know Your Credit Score Before Comparing

Your credit score directly determines the PMI rate you will be charged on a conventional loan. A buyer with a 680 score may pay 0.90% PMI while a buyer with a 760 score pays 0.30%. This difference can flip the comparison entirely. Check your score first via AnnualCreditReport.com before running numbers.

Factor in How Long You Plan to Stay

If you plan to sell or refinance within 5 years, the FHA upfront MIP is a sunk cost that hurts your total. If you plan to stay 10 or more years, the lower FHA rate (if applicable) may easily outweigh that upfront cost. Change the loan term input to reflect a shorter comparison window if needed. Our Mortgage Points vs Down Payment Calculator can help you model that tradeoff as well.

Frequently Asked Questions

What is the main difference between FHA and conventional loans?

FHA loans are government-backed and insured by the Federal Housing Administration, making them accessible to buyers with lower credit scores or smaller down payments. Conventional loans are not government-backed and typically require stronger credit but may offer lower total costs for well-qualified buyers.

What credit score do I need for each loan type?

FHA loans are available with credit scores as low as 580 with a 3.5% down payment, or as low as 500 with 10% down. Conventional loans typically require a minimum score of 620, though the best rates go to buyers with scores of 740 or higher.

Does FHA MIP go away like PMI does?

For most FHA loans originated after June 2013 with less than 10% down, the annual MIP remains for the entire loan term. If you put 10% or more down on an FHA loan, MIP cancels after 11 years. This is a key disadvantage compared to conventional PMI, which drops automatically at 80% LTV.

What is the FHA upfront mortgage insurance premium?

The upfront MIP is a one-time fee of 1.75% of the base loan amount, charged at closing on all FHA loans. It can be paid in cash or rolled into the loan balance. Rolling it in increases your loan amount and the interest you pay over time.

Can I refinance from FHA to conventional later?

Yes. Many buyers take an FHA loan initially, build equity, improve their credit score, and then refinance into a conventional loan to eliminate MIP. The right time to do this is when your LTV drops to 80% or below and your credit qualifies for competitive conventional rates.

Which loan is better for a first-time buyer?

It depends on your credit score, down payment, and how long you plan to stay. Buyers with strong credit and 10% or more saved often do better with a conventional loan. Buyers with credit between 580 and 680 or less than 5% saved often benefit more from FHA terms.

Are FHA loan limits the same everywhere?

No. FHA loan limits vary by county and are updated annually. High-cost areas like San Francisco or New York have much higher limits than rural counties. The FHA sets a national floor and ceiling each year based on median home prices.

Does a lower interest rate always make a loan cheaper?

Not always. A lower rate with higher mortgage insurance can cost more than a slightly higher rate with no insurance or lower insurance. That is why this calculator shows the total paid over the full term, not just the interest rate, so you can see the true cost comparison.

Conclusion

Picking the right loan type can save you tens of thousands of dollars over a 30-year mortgage. This FHA vs Conventional Loan Comparison Calculator gives you a clear, side-by-side view of monthly payments, insurance costs, and lifetime totals so you can make an informed decision. Use real rate quotes from lenders, factor in your credit score and down payment, and consider how long you plan to stay in the home. The numbers will tell you which loan fits your situation best.