⚖️

FHA vs Conventional Loan Calculator 2026

Compare total costs and see which loan type is better for you

F

FHA Loan

C

Conventional Loan

FHA vs Conventional: Which Should You Choose?

Choosing between an FHA loan and a conventional mortgage is one of the biggest financial decisions for first-time home buyers. While both are viable options, the right choice depends on your specific financial situation, credit score, down payment amount, and long-term homeownership plans.

FHA loans are backed by the Federal Housing Administration and designed to help buyers with lower credit scores and smaller down payments achieve homeownership. They require an upfront mortgage insurance premium (UFMIP) of 1.75% and an annual MIP that varies based on your down payment. The key downside is that if you put less than 10% down, MIP lasts the life of your loan.

Conventional loans are not government-insured and typically require higher credit scores (620+) and larger down payments (5-20%). However, once you reach 20% equity, PMI cancels automatically — unlike FHA where MIP can be permanent. If you have good credit and can afford 10-20% down, conventional usually costs less over time.

Use our comparison calculator above to see the actual numbers for your situation. Enter your home price, down payment, and interest rates to see monthly payments, total MIP vs PMI costs, and the break-even point where conventional becomes cheaper. For most buyers with credit scores above 680 and down payments above 10%, conventional wins long-term. For those with credit challenges or limited savings, FHA provides a path to homeownership.

You Might Also Like

FHA Loan Calculator FHA Affordability Calculator FHA Streamline Refinance

Frequently Asked Questions

When should I choose an FHA loan over conventional?
Choose FHA if your credit score is below 620, you can only afford a small down payment (3.5-5%), or you have been denied for a conventional loan. FHA guidelines are more flexible and forgiving of past credit issues. However, if your credit score is 680+ and you can put 10%+ down, a conventional loan will likely be cheaper due to lower long-term costs and no lifetime MIP requirement.

How do I know if FHA or conventional is cheaper long-term?
Our FHA vs Conventional calculator compares total costs including monthly payments, MIP vs PMI, upfront costs, and total interest paid over the loan term. The break-even point shows when conventional becomes cheaper. Generally, conventional wins if you can put 20%+ down and have good credit. FHA wins if your credit score is below 620 or you need a very small down payment.

Why does FHA have higher monthly payments than conventional with the same loan amount?
FHA monthly payments are higher primarily due to the monthly MIP (Mortgage Insurance Premium). Even if your interest rate is the same, FHA requires ongoing MIP that conventional loans only require if you put less than 20% down (and that PMI cancels at 20% equity). With FHA and less than 10% down, MIP lasts the life of the loan, making conventional increasingly advantageous over time.

What credit score do I need for conventional vs FHA?
FHA accepts scores as low as 500 (with 10% down) or 580 (with 3.5% down). Conventional loans typically require 620 minimum, though some lenders have overlays requiring 640-680. For the best rates on conventional loans, aim for 740+ credit score. If your score is in the 580-620 range, FHA might be your only option unless you can quickly improve your credit.

Can I switch from FHA to conventional later?
Yes, you can refinance from FHA to conventional once you qualify. This is called an FHA streamline to conventional refinance or just a standard refinance. The break-even analysis in our calculator helps you understand if/when the savings from eliminating FHA MIP outweigh the costs of refinancing (closing costs, potentially higher rate during transition).

FHA assumptions and official sources

These tools estimate one-unit, standard FHA forward mortgages. They do not determine approval, special-program eligibility, or an individual county's limit. The 2026 one-unit floor is $541,287 and the ordinary high-cost ceiling is $1,249,125. Special exception areas have separate ceilings. Check HUD's county and unit-count lookup before applying.

For terms over 15 years, annual MIP is 0.50% or 0.55% for base loans at or below $726,200, and 0.70% or 0.75% above that threshold, depending on whether the down payment is at least 5%. For terms up to 15 years, rates range from 0.15% to 0.65%, depending on base loan size and LTV. Initial monthly MIP is estimated as base loan × annual rate ÷ 12. Where totals are projected, MIP is held constant during its required duration; actual premiums can decline with the insured balance.

The refinance tool instead uses the lender MIP rate you enter because the required original value, endorsement date, and refund details are not available. Tax and insurance inputs are estimates, not quotes.

Sources checked 2026-09-25: HUD 2026 limits; HUD MIP tables.