FHA vs Conventional Loan Comparison
Compare FHA loans vs conventional mortgages. Analyze monthly payments, mortgage insurance costs, down payment requirements, and total lifetime expenses for each loan type.
Interactive Comparison
Adjust parameters below to see how changes affect each scenario. The best value in each category is highlighted in green.
| Scenario | Type | Home Price | Down % | Rate | Term | Monthly | Total Interest | Total Cost | Payoff | Actions |
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FHA vs Conventional Loan Handbook
Comparing down payment flexibility, mortgage insurance costs, and total loan expenses
What this engine does
This comparison tool models an FHA loan and a conventional 30-year fixed mortgage side by side using the same home price. The FHA scenario uses a 3.5% down payment and FHA MIP, while the conventional scenario uses a 5% down payment with private mortgage insurance. It calculates monthly payment differences, total mortgage insurance costs, and lifetime interest for both options.
When to deploy this tool
Use this comparison when you are deciding between an FHA-insured loan and a conventional mortgage. FHA loans are attractive for buyers with lower credit scores (580+) or limited down payment savings (as low as 3.5%). Conventional loans may offer lower total costs for buyers with good credit (660+) who can put at least 5% down and want to avoid FHA's lifetime mortgage insurance requirements.
How Calculations Work
Both loans are modeled on a $350,000 home with their respective down payment and rate assumptions. The FHA loan includes both the upfront Mortgage Insurance Premium (1.75% of base loan, typically rolled into the loan) and the annual MIP (0.85% of the loan balance). The conventional loan includes private mortgage insurance (PMI) that can be cancelled once the loan-to-value ratio reaches 80%, unlike FHA MIP which typically remains for the life of the loan on 30-year terms with less than 10% down.
Common Strategic Pitfalls
A common mistake is ignoring that FHA MIP on a 30-year loan with less than 10% down typically lasts the entire loan term, while conventional PMI can be cancelled at 78-80% LTV. Another error is assuming FHA always has lower rates — conventional loans often have competitive rates for borrowers with good credit. Finally, many buyers forget to factor in the upfront FHA MIP premium (1.75%) which adds thousands to the loan balance.
Sources & Assumptions
Calculations are based on industry-standard financial models. To review the mathematical formulas and verification reports in detail, visit our dedicated Financial Methodology page.
Pre-populated data reflects estimated national averages sourced from county tax agencies and regional insurance reports. Homeowners can customize these percentages inside advanced settings cards.
PMI is modeled at 0.75% of the initial loan principal annually for LTV ratios exceeding 80%, automatically terminating in calculations when the outstanding loan balance drops to or below 80% of the initial purchase price.
Frequently Asked Questions
Is FHA cheaper than conventional?
FHA loans can be cheaper upfront due to the lower down payment requirement, but conventional loans often cost less over the long term because PMI can be cancelled once you reach 20% equity. FHA MIP on a 30-year loan with less than 10% down typically lasts the entire loan term.
What credit score do I need for FHA vs conventional?
FHA loans require a minimum credit score of 580 for 3.5% down (or 500 with 10% down). Conventional loans typically require a minimum score of 620, but better rates are available at 660+ and the best rates at 740+.
Can I remove FHA mortgage insurance?
For FHA loans originated after June 3, 2013, MIP on 30-year loans with less than 10% down lasts the entire loan term. With 10% or more down, MIP cancels after 11 years. This is a key difference from conventional loans where PMI can be removed at 80% LTV.
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Financial Disclaimer
This calculator is intended for planning and educational purposes only. It relies on assumptions and information provided by you regarding your goals, expectations, and financial situation. Results should not be used as your sole source of information. Outputs are estimates only and do not constitute a loan offer, financial advice, legal advice, tax advice, or solicitation. Consult qualified professionals before making financial decisions.