FHA vs Conventional Loan Calculator

Compare FHA and conventional loans side-by-side to see which mortgage option is better for you.

Comparison Calculator
About This Calculator

FHA vs Conventional Loan Comparison

Enter your loan details below to compare FHA and conventional loan options.

FHA minimum: 3.5% with 580+ credit score. Conventional minimum: 3% for some programs.
FHA minimum: 580 for 3.5% down, 500-579 for 10% down. Conventional minimum: typically 620+.

Key Differences Between FHA and Conventional Loans

Feature FHA Loan Conventional Loan
Minimum Down Payment 3.5% with 580+ credit score
10% with 500-579 credit score		 3% for some programs
5-20% typical
Minimum Credit Score 500 (with 10% down)
580 (with 3.5% down)		 620+ typical
740+ for best rates
Mortgage Insurance Upfront MIP: 1.75%
Annual MIP: 0.15-0.75%
Duration: 11 years to life of loan		 No upfront PMI
Monthly PMI: 0.25-2.25%
Removable at 20% equity
Debt-to-Income Ratio Up to 43% (can be higher with compensating factors) Up to 36-45% (varies by lender)
Property Requirements Stricter (must meet FHA standards) More flexible

Detailed Comparison: FHA vs Conventional Loans

FHA Loans: Pros and Cons

Advantages

  • Lower credit score requirements: As low as 580 for a 3.5% down payment
  • Lower down payment options: As low as 3.5% of the purchase price
  • More flexible debt-to-income ratios: Can exceed 43% with compensating factors
  • More lenient on recent credit issues: May qualify sooner after bankruptcy or foreclosure
  • Competitive interest rates: Often lower than conventional loans for borrowers with lower credit scores

Disadvantages

  • Mandatory mortgage insurance: Required for all FHA loans regardless of down payment
  • Upfront MIP cost: 1.75% of the loan amount due at closing (can be financed)
  • Long-term MIP: For loans with less than 10% down, MIP lasts for the life of the loan
  • Stricter property requirements: Home must meet FHA property standards
  • Loan limits: Maximum loan amounts vary by county

Best For

  • First-time homebuyers
  • Borrowers with lower credit scores (580-680)
  • Buyers with limited savings for down payment
  • Borrowers with higher debt-to-income ratios
  • Those who have had recent credit challenges

Conventional Loans: Pros and Cons

Advantages

  • No upfront mortgage insurance fee: Unlike FHA's 1.75% upfront MIP
  • PMI is removable: Once you reach 20% equity, PMI can be canceled
  • Lower mortgage insurance for good credit: PMI rates decrease as credit scores increase
  • Higher loan limits: Generally higher than FHA limits in most areas
  • More property types: Fewer restrictions on property condition and types
  • Lower rates for excellent credit: Best rates for borrowers with 740+ credit scores

Disadvantages

  • Higher credit score requirements: Typically 620+ minimum, with best rates at 740+
  • Higher down payment typically required: While some programs offer 3%, 5-20% is more common
  • Stricter debt-to-income requirements: Typically capped at 36-45%
  • Less flexibility with credit issues: Longer waiting periods after bankruptcy or foreclosure
  • Higher rates for lower credit scores: Can be significantly higher than FHA rates for scores under 680

Best For

  • Borrowers with good to excellent credit (680+)
  • Those who can afford a larger down payment (10%+)
  • Buyers planning to stay in the home long-term
  • Those who want to avoid lifetime mortgage insurance
  • Buyers of higher-priced homes (above FHA limits)

Key Factors in Choosing Between FHA and Conventional Loans

Credit Score

If your score is below 620: FHA loan is likely your best or only option.

If your score is 620-680: FHA may offer better rates and terms.

If your score is 680-740: Compare both options to see which is more cost-effective.

If your score is 740+: Conventional loan will typically offer the best rates and lowest costs.

Down Payment

If you have less than 5%: FHA (3.5%) or special conventional programs (3%) may work.

If you have 5-10%: Compare both options, but FHA may have lower monthly costs initially.

If you have 10-15%: Conventional may be better long-term due to removable PMI.

If you have 20% or more: Conventional loan with no PMI is almost always the best choice.

Long-Term Plans

If you plan to sell/refinance within 5 years: FHA may have lower initial costs.

If you plan to stay 5-10 years: The ability to remove PMI on conventional loans becomes more valuable.

If you plan to stay 10+ years: Conventional loans typically have lower lifetime costs due to removable PMI.

Debt-to-Income Ratio

If your DTI is above 45%: FHA loans are more flexible with higher DTI ratios.

If your DTI is 36-45%: Both loan types may work, but approval may be easier with FHA.

If your DTI is below 36%: Either loan type works well; focus on other factors.

Property Condition

If the home needs repairs: FHA has stricter property standards, so conventional may be easier.

If buying a fixer-upper: Consider FHA 203(k) renovation loan or conventional renovation loan.

If the home is in excellent condition: Either loan type works well; focus on other factors.

Loan Amount

If buying below FHA loan limits: Either loan type may work; compare costs.

If buying near or above FHA loan limits: Conventional loans may be your only option.

If buying in a high-cost area: Check specific loan limits for your county for both loan types.

Explore Our Other FHA Calculators

Basic FHA Calculator

Simple calculator with essential inputs for a quick FHA loan payment estimate.

Use Calculator

Advanced FHA Calculator

Detailed calculator with additional inputs like property taxes, insurance, and HOA fees.

Use Calculator

FHA Refinance Calculator

Calculate potential savings from refinancing your existing mortgage to an FHA loan.

Use Calculator