FHA vs Conventional Calculator

This FHA vs conventional calculator compares the two most common low-down-payment loans on the same home. It shows each monthly payment with mortgage insurance and, more importantly, what each loan costs over the years you actually expect to keep it. That second number is usually what decides which one is cheaper.

How do you use this calculator?

Enter the price, your down payment and the rates two lenders quoted you, one FHA and one conventional. Add the PMI rate from the conventional quote, then pick your term and how long you plan to keep the loan. Real quotes give a real answer; guesses give a rough one.

Tips on each input:

• Down payment. Use the same percentage for both. FHA requires at least 3.5% with a credit score of 580 or higher (HUD Handbook 4000.1).
• Rates. FHA and conventional rates often differ for the same borrower. Use the rates on each Loan Estimate.
• PMI rate. This is the input that swings the result most. A strong credit score can mean a much lower PMI rate.
• Years. Be honest. Many people sell or refinance well before 30 years.

How is the comparison calculated?

For FHA, the calculator adds the 1.75% upfront premium to the loan and charges annual MIP from HUD’s table. For conventional, it charges PMI until the balance reaches 78% of the price. It then totals what each loan costs over your time frame.

The steps:

1. FHA loan = base loan + 1.75% upfront MIP. Monthly payment = principal and interest on that total + annual MIP ÷ 12 (HUD Mortgagee Letter 2023-05).
2. FHA MIP runs for the whole period if LTV is over 90%, or up to 11 years if it is 90% or less. The calculator recalculates it each year on the remaining balance.
3. Conventional payment = principal and interest on the base loan + PMI (loan × PMI rate ÷ 12) while the balance is above 78% of the price. With 20% or more down, there is no PMI.
4. Cost over the period = all payments made + balance still owed at the end − the starting conventional loan amount.

Principal and interest use the standard formula M = P × r(1 + r)^n / ((1 + r)^n − 1). If the two costs are within $500, the verdict is “about the same.” Taxes, homeowners insurance and closing costs are left out because they are similar for both loans.

Worked example

Change one input and the answer moves. Here is the same home and 5% down.

Notice that a lower PMI rate, which usually comes with a higher credit score, tips the result to conventional.

What does your result mean?

The verdict tells you which loan is cheaper for your numbers and time frame, not which is better in every way. FHA tends to win for lower credit scores and longer holds at a rate discount. Conventional tends to win for strong scores, where PMI is cheap and ends once you build equity.

Rules that can change the answer:

• PMI removal. On a conventional loan you can ask to cancel PMI at 80% of original value, and it must end at 78% if you are current (CFPB). This calculator uses the automatic 78% point, so asking at 80% could make conventional a bit cheaper.
• FHA MIP duration. With 10% or more down, FHA MIP ends after 11 years; with less, it lasts for the life of the loan.
• Credit score. FHA allows lower scores; the CFPB notes conventional loans “typically cost less than FHA loans but can be harder to get” (CFPB).
• 3% down programs. Freddie Mac’s Home Possible allows 3% down for borrowers with income at or below 80% of the area median (Freddie Mac).
• Refinancing. A plan to refinance FHA into conventional later shortens how long you pay MIP.

Common mistakes

Most wrong answers come from guessed inputs or from comparing monthly payments alone. Avoid these:

• Using today’s average rate for both loans instead of real quotes.
• Leaving PMI at the default when your credit score is low or high.
• Comparing only the monthly payment and ignoring how long you will keep the loan.
• Forgetting that FHA’s upfront premium raises the loan balance.
• Assuming FHA MIP can be canceled like PMI.

Related tools: the FHA MIP calculator breaks down FHA insurance, and the PMI removal calculator shows when conventional PMI can end. If your credit score is near the line, read whether you can buy a house with a 620 credit score.