FHA vs Conventional Loan Calculator
FHA loans require just 3.5% down and accept credit scores as low as 580 — but carry permanent mortgage insurance. Conventional loans need 620+ credit and typically 5%–20% down, but PMI drops off at 20% equity. Which is cheaper for you depends on your exact numbers.
Enter your home price, down payment, and credit score to see a true side-by-side comparison of monthly payment, mortgage insurance, upfront costs, and 5-year total cost for FHA vs conventional.
FHA Loan
Conventional
Estimated Rates by Credit Score — 30-Year Fixed (2026)
| Credit Score | FHA Rate | Conv. Rate | Recommended |
|---|---|---|---|
| 580–619 | 7.0% | Not available | FHA |
| 620–659 | 6.75% | 7.40% | Usually FHA |
| 660–699 | 6.50% | 7.00% | Depends on down % |
| 700–739 | 6.50% | 6.75% | Usually Conv. |
| 740+ | 6.50% | 6.50% | Conventional |
FHA vs Conventional — The Core Differences
FHA loans are insured by the Federal Housing Administration, allowing lenders to offer them to borrowers with lower credit scores and smaller down payments. Conventional loans are not government-backed — they conform to Fannie Mae/Freddie Mac guidelines and carry stricter credit requirements but fewer long-term costs for qualified borrowers.
The single biggest difference in practice: mortgage insurance. FHA charges both an upfront mortgage insurance premium (MIP) of 1.75% of the loan amount and an annual MIP of 0.55%–1.05% that, for loans with less than 10% down, never goes away. Conventional PMI costs vary by credit score and down payment but automatically cancels when your loan balance reaches 78% of the original home value — typically 7–10 years into the loan.
When FHA Wins
FHA is typically the better choice when your credit score is below 680. Below that threshold, conventional lenders charge LLPA (Loan Level Price Adjustments) that significantly increase your rate or required fees. FHA rates are less punitive for lower credit scores, and the guaranteed MIP becomes less costly than the elevated conventional PMI + higher rate combination. FHA also allows debt-to-income ratios up to 57%, versus 45%–50% for conventional — making it accessible for borrowers with more existing debt.
If you are struggling to qualify, check your DTI first with our mortgage DTI calculator and see what credit score improvements could do for your rate with the credit score mortgage rate calculator.
When Conventional Wins
With a credit score of 740+ and 10%–20% down, conventional is almost always the lower total cost. The PMI rate is lower, the interest rate is comparable to or better than FHA, and — critically — the PMI disappears. The FHA upfront MIP of 1.75% ($6,125 on a $350,000 loan) adds thousands to your starting balance, compounding interest costs for the life of the loan.
A borrower with 20% down pays zero PMI on conventional — while FHA still charges annual MIP. For a $350,000 home with 20% down, the FHA borrower pays $2,803/year in MIP that a conventional borrower avoids entirely.
| Metric | FHA (700 credit) | Conventional (700) |
|---|---|---|
| Interest Rate | 6.50% | 6.75% |
| Monthly P&I | $2,085 | $2,137 |
| Monthly Insurance | $178 MIP | $142 PMI |
| Upfront Costs | $5,775 MIP | $0 |
| Insurance Removal | Never (refi only) | ~Yr 9 at 20% equity |
| 5-Year Total Cost | $141,840 | $136,740 |
The "FHA to Conventional" Refi Strategy
Many buyers use FHA to get into a home sooner, then refinance into a conventional loan once they reach 20% equity — eliminating MIP permanently. This strategy makes sense if: (1) you could not otherwise qualify for conventional, (2) home values are rising and you will reach 20% equity faster than the loan amortization alone, or (3) your credit score improves enough to qualify for a competitive conventional rate. The break-even on the refi depends on closing costs (typically 2%–3% of loan) versus monthly savings from dropping MIP.
To understand how your credit score changes your available rates, use our credit score mortgage rate calculator. For the full FHA vs conventional breakdown, see our guide on FHA vs conventional loans explained.
Frequently Asked Questions
What is the difference between FHA and conventional loans?
FHA loans are government-backed and designed for borrowers with lower credit scores (580+) or smaller down payments (3.5%). They require mortgage insurance for the life of the loan. Conventional loans are not government-backed and require a minimum 620 credit score, but PMI drops off once you reach 20% equity. Conventional loans have lower total costs for borrowers with good credit (720+) and 10%+ down payments.
When is an FHA loan better than conventional?
FHA beats conventional when your credit score is below 660, you have only 3.5% to put down, or you have higher debt-to-income ratios (FHA allows up to 57% back-end DTI vs. 45% conventional). For credit scores above 720 with 10%+ down, conventional almost always wins on total cost.
Can I remove FHA mortgage insurance?
For FHA loans with less than 10% down originated after June 2013: No — MIP lasts the entire life of the loan. The only way to remove it is to refinance into a conventional loan once you reach 20% equity. For FHA loans with 10%+ down: MIP cancels after 11 years. For conventional loans, PMI cancels automatically at 78% LTV.
What credit score do I need for a conventional loan?
Most conventional lenders require a minimum 620 credit score, but the best rates require 740+. With 620–679, conventional PMI costs can be high, making FHA more attractive. With 680–739, it depends on your down payment. With 740+, conventional almost always offers better total cost.
What are FHA loan limits in 2026?
FHA loan limits vary by county. For 2026, the baseline limit for a single-family home is $524,225 in most counties. High-cost areas can reach up to $1,209,750. Homes above these limits must use conventional or jumbo financing.
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