← Back to All Tools
🏡

FHA vs Conventional Loan Mortgage Calculator

Compare FHA loans (3.5% down, 1.75% upfront MIP, lifetime annual MIP) against Conventional 97 / conforming mortgages (3% down, cancellable PMI).

Calculation Results

Initial Monthly Payment Comparison: Conv: $2,540 vs FHA: $2,585 Conventional saves $45 / mo initially
Upfront Financed Mortgage Insurance: FHA: +$6,400 (1.75% UFMIP) Conventional: $0 Upfront Fee
Monthly Insurance Premium (PMI / MIP): Conv PMI: $182 vs FHA MIP: $171 Conv PMI auto-cancels at 78% LTV; FHA MIP is permanent
10-Year Cumulative Cost Advantage: Conventional saves $18,420

About This Calculator

Compare FHA loans (3.5% down, 1.75% upfront MIP, lifetime annual MIP) against Conventional 97 / conforming mortgages (3% down, cancellable PMI).

Frequently Asked Questions

When does Conventional PMI cancel versus FHA MIP?

Under the Homeowners Protection Act, Conventional private mortgage insurance (PMI) automatically terminates once your loan principal reaches 78% of original purchase price (or you can request cancellation at 80%). In contrast, FHA annual Mortgage Insurance Premium (MIP) is permanent for the life of the loan if your down payment was less than 10%.

What is FHA Upfront Mortgage Insurance Premium (UFMIP)?

The Federal Housing Administration charges a mandatory 1.75% upfront mortgage insurance premium on all FHA purchase loans. For a $350,000 base loan, $6,125 is added directly to your financed mortgage balance.

Who benefits more from an FHA loan?

Borrowers with credit scores between 580 and 660, higher debt-to-income (DTI) ratios up to 50%, or limited down payment savings benefit significantly from FHA loans because FHA does not penalize lower credit scores with exorbitant risk-based pricing adjustments.

Can you refinance out of an FHA loan later to drop MIP?

Yes! Once you build at least 20% home equity through principal paydown or home price appreciation, you can refinance your FHA loan into a Conventional mortgage with zero mortgage insurance.