FHA vs Conventional Loan Calculator 2026: Which Saves You More?
🤔 The $50,000 Question: FHA or Conventional?
FHA Loan
- ✅ 3.5% down payment
- ✅ 580+ credit score
- ✅ Easier to qualify
- ❌ Lifetime MIP (most cases)
- ❌ Higher total cost
Conventional Loan
- ✅ PMI drops at 20% equity
- ✅ Lower total cost
- ✅ Better for good credit
- ❌ 3-20% down payment
- ❌ 620+ credit score
💰 The Truth: FHA is easier to qualify for, but Conventional saves you $20K-$50K over the life of the loan if you have good credit.
Use our calculator to see which loan saves YOU the most money based on your credit score, down payment, and how long you'll stay in the home.
🧮 FHA vs Conventional Loan Calculator
Enter Your Info:
FHA Loan
Conventional Loan
🏆 Winner: Conventional Loan
Why Conventional wins: Lower rate (6.5% vs 6.75%) + PMI drops at 20% equity (FHA MIP is lifetime). Even with 5% down, Conventional saves you money if you have 680+ credit.
⚠️ Important: This Changes Based on YOUR Situation
FHA wins if: Credit score 580-619, down payment 3.5%, staying less than 5 years. Conventional wins if: Credit score 680+, down payment 5%+, staying 5+ years. Use our calculator to see YOUR best option.
🔍 FHA vs Conventional: Key Differences
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Minimum Credit Score | 580 (3.5% down) 500-579 (10% down) | 620 (most lenders) 640+ for best rates |
| Minimum Down Payment | 3.5% (580+ score) 10% (500-579 score) | 3% (first-time buyers) 5% (repeat buyers) |
| Mortgage Insurance | Upfront: 1.75% Monthly: 0.55-0.85% Lifetime (most cases) | No upfront fee Monthly: 0.5-1.5% Drops at 20% equity |
| Interest Rate | 6.5-7.0% (2026) | 6.25-6.75% (2026) |
| DTI Ratio | Up to 50% | Up to 45% (50% with compensating factors) |
| Loan Limits | $498,257 (most areas) $1,149,825 (high-cost) | $766,550 (most areas) $1,149,825 (high-cost) |
| Property Requirements | Must meet FHA standards Stricter inspection | Standard appraisal More flexible |
| Best For | Lower credit (580-619) Small down payment Higher DTI | Good credit (680+) 5%+ down payment Long-term ownership |
🎯 When to Choose FHA vs Conventional
✅ Choose FHA If:
- •Credit Score 580-619
FHA accepts lower scores. Conventional requires 620+.
- •Only Have 3.5% Down
FHA minimum is 3.5%. Conventional is 3-5%.
- •High DTI (45-50%)
FHA allows up to 50% DTI. Conventional caps at 45%.
- •Recent Bankruptcy/Foreclosure
FHA: 2-3 years. Conventional: 4-7 years.
- •Staying Less Than 5 Years
Lifetime MIP matters less if you sell/refi soon.
✅ Choose Conventional If:
- •Credit Score 680+
You'll get better rates and save $20K-$50K.
- •Have 5%+ Down
PMI drops at 20% equity. FHA MIP is lifetime.
- •Staying 5+ Years
Long-term savings from lower rates + no lifetime MIP.
- •Buying Above FHA Limits
Conventional limits are higher ($766K vs $498K).
- •Want Flexibility
Fewer property restrictions, easier to qualify for fixer-uppers.
💰 Real Examples: Who Saves More?
Scenario 1: First-Time Buyer, Low Credit
Buyer Profile:
- • Credit Score: 600
- • Down Payment: 3.5% ($12,250)
- • Home Price: $350,000
- • DTI: 48%
Winner: FHA
- • FHA: Approved at 7.0%
- • Conventional: Denied (score too low)
- • Savings: N/A (only option)
Why FHA wins: Conventional requires 620+ credit. FHA is the ONLY option for this buyer.
Scenario 2: Good Credit, 5% Down
Buyer Profile:
- • Credit Score: 720
- • Down Payment: 5% ($17,500)
- • Home Price: $350,000
- • Staying: 10 years
Winner: Conventional
- • FHA: $2,387/mo, $286,440 total
- • Conventional: $2,256/mo, $270,720 total
- • Savings: $131/mo, $15,720 over 10 years
Why Conventional wins: Lower rate (6.25% vs 6.75%) + PMI drops at year 5 when equity hits 20%. FHA MIP is lifetime.
Scenario 3: Excellent Credit, 20% Down
Buyer Profile:
- • Credit Score: 760
- • Down Payment: 20% ($70,000)
- • Home Price: $350,000
- • Staying: 30 years
Winner: Conventional (by a LOT)
- • FHA: $2,047/mo, $736,920 total
- • Conventional: $1,770/mo, $637,200 total
- • Savings: $277/mo, $99,720 over 30 years
Why Conventional wins BIG: No PMI (20% down) + lower rate (6.0% vs 6.5%) + no lifetime MIP. FHA makes NO sense here.
❓ Frequently Asked Questions
Can I switch from FHA to Conventional later?
Yes! This is the smart strategy. Buy with FHA (easier to qualify), make on-time payments for 12-24 months to boost your credit to 680+, then refinance to Conventional. You'll drop the lifetime MIP and save $200-300/month.
Is FHA MIP really for the life of the loan?
Yes, if you put down less than 10%. FHA loans with less than 10% down have lifetime MIP. If you put down 10%+, MIP drops after 11 years. But Conventional PMI drops at 20% equity regardless of down payment. This is why Conventional saves money long-term.
Why is FHA interest rate higher than Conventional?
Higher risk = higher rate. FHA accepts lower credit scores and smaller down payments, so default risk is higher. Lenders charge 0.25-0.5% more to compensate. If you have good credit (680+), Conventional gives you better rates.
Can I use FHA for a second home or investment property?
No. FHA is primary residence only. You must live in the home for at least 12 months. For second homes or investment properties, you need Conventional, VA (if eligible), or specialized investment loans.
What if I'm right on the edge (620-680 credit)?
Run the numbers both ways. At 620-680, you qualify for both. FHA might have easier approval, but Conventional saves money long-term. Use our calculator to compare. If staying 5+ years and have 5%+ down, Conventional usually wins.
Do sellers prefer Conventional over FHA offers?
Yes, slightly. FHA requires stricter property inspections, which can delay closing or kill deals. Conventional is more flexible. In competitive markets, Conventional offers have an edge. But don't let this stop you — FHA is still widely accepted.
⚖️ Compare FHA vs Conventional for YOUR Situation
Get personalized comparison based on your credit, down payment, and timeline. See which loan saves you the most money.
🎯 The Bottom Line
FHA vs Conventional isn't about which is "better" — it's about which is better for YOU.
Choose FHA if: You have lower credit (580-619), minimal down payment (3.5%), or need easier qualification. It's designed for first-time buyers and those rebuilding credit.
Choose Conventional if: You have good credit (680+), 5%+ down payment, and plan to stay 5+ years. You'll save $20K-$50K from lower rates and PMI that drops at 20% equity.