About the FHA vs Conventional Loan Calculator
This FHA vs conventional calculator compares the two most common low-down-payment mortgages side by side. FHA loans often carry a lower interest rate and accept lower credit scores, but they charge an upfront mortgage insurance premium of 1.75% of the loan plus an annual MIP that, with less than 10% down, lasts for the life of the loan. Conventional loans charge private mortgage insurance (PMI) that depends heavily on your credit score but ends automatically when the balance reaches 78% of the home’s original value.
Enter the price, your down payment, the rate quoted for each loan and a PMI rate, then choose how many years you expect to keep the mortgage. The calculator builds a month-by-month schedule for both loans and adds up interest and mortgage insurance — including the upfront MIP — so you can see which is cheaper over your real time horizon, not just in the first month.
FHA premiums follow HUD Mortgagee Letter 2023-05: 1.75% upfront and an annual MIP of 0.50% or 0.55% for most 30-year loans (0.15% or 0.40% for 15-year terms), charged on the average balance each year. FHA loan limits vary by county, and many FHA borrowers later refinance into a conventional loan to drop MIP — the calculator does not model a refinance.
With the default inputs, the savings with the cheaper loan is $5,506.56. Change any value above to recalculate instantly.
How to use the fha vs conventional loan calculator
- 1Enter the home price and the down payment percentage you plan to use.
- 2Enter the rate quoted for an FHA loan and for a conventional loan.
- 3Enter the PMI rate for your credit score (ask your lender).
- 4Choose whether to finance the FHA upfront premium and how long you’ll keep the loan.
- 5Compare monthly payments and the total cost, and check the chart for the crossover year.
Formula and method
Both loans are amortized month by month with the standard level-payment formula. The FHA base loan is the price minus your down payment; the 1.75% upfront MIP is either added to the loan (so you also pay interest on it) or paid in cash, and either way it counts as a cost. FHA annual MIP uses the HUD table for your term, base loan and LTV, is charged each month as the annual rate × the average scheduled balance for that loan year ÷ 12, and lasts 11 years with 10% or more down, otherwise for the whole term.
Conventional PMI is the yearly PMI rate × the original loan ÷ 12, charged only when the loan-to-value is above 80% and dropped automatically once the scheduled balance falls to 78% of the original price (the Homeowners Protection Act rule). The comparison adds interest and mortgage insurance over the years you expect to keep the loan; principal repaid is equity, not cost, so it is excluded.
- h
- Months in your comparison horizon
- MIP_y
- Monthly FHA annual MIP during loan year y
- PMI
- Monthly conventional private mortgage insurance
Worked examples
$350,000 home, 5% down, keep for 7 years
The FHA loan is $332,500 plus $5,818.75 upfront MIP. At 6.25% with 0.50% annual MIP the first payment is about $2,223, versus $2,323 for the conventional loan at 6.625% with $193.96 of PMI. Over 7 years FHA costs about $158,381 in interest and insurance against $163,887, so the lower FHA rate makes it roughly $5,507 cheaper.
Equal 6.5% rates, kept for 15 years
When both loans carry the same rate, FHA starts behind because of the $5,818.75 upfront premium. Conventional PMI stops after about 11 years while FHA MIP continues for the life of the loan, so after 15 years the conventional loan is about $7,125 cheaper.
10% down on a 15-year term
With 10% down (90% LTV) on a 15-year term, FHA annual MIP drops to 0.15% and ends after 11 years, but the upfront premium is still 1.75% of the $360,000 base loan, or $6,300. Conventional PMI at 0.35% ends after just 3 years, so over 10 years the conventional loan is about $5,633 cheaper even with its slightly higher rate.
Frequently asked questions
Is FHA or conventional better?+
FHA is often better if your credit score is below about 680 or your debt-to-income ratio is high, because its rate and insurance do not rise as sharply with lower scores. With good credit, conventional usually wins over time because PMI ends at 78% loan-to-value while FHA MIP with less than 10% down lasts the life of the loan.
What is the difference between MIP and PMI?+
MIP is the mortgage insurance on FHA loans, set by HUD: 1.75% upfront plus an annual premium. PMI is private mortgage insurance on conventional loans, priced by private insurers based on credit score and down payment, with no upfront premium in most cases.
How much is FHA mortgage insurance in 2026?+
Under HUD Mortgagee Letter 2023-05, the upfront premium is 1.75% of the base loan and the annual MIP for most 30-year loans up to $726,200 is 0.55% with less than 5% down or 0.50% with 5% or more down. Terms of 15 years or less pay 0.15% to 0.40%.
Can I remove FHA mortgage insurance?+
If you put down at least 10%, annual MIP ends after 11 years. With less than 10% down it lasts for the life of the loan, so the usual way to remove it is to refinance into a conventional loan once you have 20% equity.
When does PMI come off a conventional loan?+
You can ask your servicer to cancel PMI when the balance reaches 80% of the original value, and it must end automatically when the scheduled balance reaches 78%, provided you are current on payments.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.