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Which loan wins? It depends on credit and time
$400,000 home, FHA with 3.5% down at 6.25% vs conventional with 5% down at 6.5%. PMI rates are typical for each credit range; check real quotes from lenders.
| Credit (PMI rate) | Keep 5 years | Keep 10 years | Keep 30 years |
|---|---|---|---|
| Excellent credit (760+)PMI 0.3% / yr | Conv. by $10,708 | Conv. by $14,384 | Conv. by $50,432 |
| Good credit (700–759)PMI 0.6% / yr | Conv. by $5,008 | Conv. by $2,984 | Conv. by $37,607 |
| Fair credit (660–699)PMI 1% / yr | FHA by $2,592 | FHA by $12,216 | Conv. by $20,506 |
| Lower credit (620–659)PMI 1.5% / yr | FHA by $12,092 | FHA by $31,216 | FHA by $868 |
"Cost to own" difference: cash at closing + all loan and mortgage-insurance payments + balance still owed. Lenders also charge higher conventional rates for lower scores, which this table doesn't add — so FHA's real advantage at lower credit is usually bigger.
FHA vs conventional: the 2026 rules
| FHA | Conventional | |
|---|---|---|
| Minimum down payment | 3.5% (580+ credit), 10% (500–579) | 3% (first-time buyer programs), otherwise 5% |
| Typical minimum credit score | 580 | 620 |
| Upfront mortgage insurance | 1.75% of the loan, usually financed | None |
| Annual mortgage insurance | 0.5–0.55% a year (30-year loans up to $726,200) | PMI, about 0.3–1.5% a year depending on credit and down payment |
| When it ends | Life of loan under 10% down; 11 years with 10%+ down | Automatically at 78% loan-to-value; on request at 80% |
| 2026 loan limit (one unit) | $541,287–$1,249,125 by county | $832,750 (higher in high-cost counties) |
Sources: HUD Mortgagee Letter 2023-05 (annual MIP) — archived HUD copy; FHFA — Conforming Loan Limit Values for 2026.
More detail on each loan: FHA loan calculator · conventional loan calculator · VA loan calculator.
Assumptions
- Same home, same taxes, homeowners insurance and HOA for both loans, so those are left out of the cost comparison.
- FHA: 1.75% upfront MIP and the annual MIP for your loan-to-value; conventional PMI at the rate you enter, ending when the balance reaches 78% of the price.
- Closing costs other than upfront MIP, and what your down payment could earn elsewhere, aren't included.
Frequently asked questions
Is FHA or conventional better?+
Conventional is usually cheaper if your credit score is about 700 or higher, because PMI is cheap and ends on its own. FHA often wins with lower scores or higher debt-to-income ratios, since its rates and mortgage insurance don't rise much with weaker credit. The calculator above shows which costs less for your numbers.
Does FHA mortgage insurance ever go away?+
With less than 10% down, FHA annual MIP lasts for the life of the loan; with 10% or more down it ends after 11 years. To drop it sooner, most people refinance into a conventional loan once they have about 20% equity.
What is the minimum down payment for FHA vs conventional?+
FHA requires 3.5% down with a credit score of 580 or higher. Conventional loans allow 3% down for many first-time buyers and 5% otherwise.
Why are FHA rates lower but payments sometimes higher?+
FHA loans add a 1.75% upfront MIP (usually rolled into the loan) plus annual MIP of about 0.5–0.55% a year. That can outweigh a slightly lower interest rate, especially if you keep the loan for many years.
What are the 2026 loan limits?+
The conforming (conventional) limit for a one-unit home is $832,750 in most of the country. FHA limits start at $541,287 and go up to $1,249,125 in high-cost counties.
Related calculators
Uses 2026 rules and limits. Last reviewed October 15, 2026. Calculator version 1.0.0. Sources: HUD Mortgagee Letter 2023-05 (annual MIP) — archived HUD copy · HUD — FHA Announces 2026 Loan Limits (No. 25-145) · FHFA — Conforming Loan Limit Values for 2026. Results are estimates for educational purposes, not financial, tax or lending advice. How we check our numbers.