What you'll need
- Home purchase price
- Down payment amount
- Expected interest rate
- Your credit score range
What you'll get
- Side-by-side monthly payment — FHA vs conventional
- Mortgage insurance breakdown — MIP vs PMI
- 5-year total cost — True cost comparison
- Insurance cancellation — When each drops off
FHA vs Conventional: $350,000 Home, 5% Down at 7.40%, 720–739 Credit
| Metric | FHA Loan | Conventional |
|---|---|---|
| Down payment | $17,500 | $17,500 |
| Upfront MIP/fee | $5,819 | $0 |
| Annual mortgage insurance | 0.50% (life of loan) | 0.66% (ends at 80% LTV) |
| Monthly MIP/PMI | $139 | $183 |
| Monthly P&I | $2,342 | $2,302 |
| P&I + mortgage insurance | $2,481 | $2,485 |
| 5-year P&I + mortgage insurance | $148,860 | $149,102 |
Computed by this page's calculator at $350,000 with $17,500 (5%) down, a 7.40% 30-year fixed rate for both loans (Freddie Mac PMMS, week of October 8, 2026) and a 720–739 credit score. FHA: the 1.75% upfront MIP is financed into the loan, and with less than 10% down the annual MIP lasts the life of the loan (HUD Mortgagee Letter 2023-05). Conventional: PMI from the National MI rate card; you can ask to cancel it when the balance reaches 80% of the original price (month 135 here), and it ends automatically at 78%. The 5-year row is principal, interest and mortgage insurance over 60 months; taxes, homeowners insurance and closing costs are not included.
State guides
How this varies by state
Property taxes, insurance costs, first-time buyer programs, and closing costs differ significantly across states. See local data for your state.
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Tennessee
At 5% down on a $350,000 home, this calculator's own numbers show the crossover sits around a 740 credit score: above it, conventional PMI usually costs less per month than FHA MIP; at 720–739 the two land within a few dollars; below that, FHA usually wins, sometimes by well over $100 a month. Credit score is doing more work than down payment in this comparison, because FHA's mortgage insurance doesn't respond to your credit score at all.
Two totally different ways of pricing risk
FHA and conventional loans handle mortgage insurance on completely different logic, and this calculator's constants make the difference concrete. FHA charges a flat 1.75% upfront premium plus an annual premium set by loan-to-value (LTV) and loan size: on a 30-year loan with a base amount up to $726,200, 0.55% above 95% LTV and 0.50% at 95% or below (0.75% and 0.70% above $726,200), per HUD Mortgagee Letter 2023-05. At 90% LTV or below the premium stops after 11 years; above 90% it runs for the life of the loan. Your credit score never enters that formula.
Conventional private mortgage insurance (PMI) does the opposite — it is $0 at 80% LTV or below, and above that it prices credit score aggressively and LTV as well. This calculator reads PMI from a published mortgage-insurer rate card (the same one our PMI calculator uses): at 5% down (the 90.01–95% LTV row) it runs from 0.38% a year for a 760+ score up to 1.42% for 620–639 — nearly a fourfold spread for the same loan.
| Credit score | LTV 95.01–97% | LTV 90.01–95% | LTV 85.01–90% | LTV 85% and under |
|---|---|---|---|---|
| 760+ | 0.58% | 0.38% | 0.28% | 0.19% |
| 740–759 | 0.70% | 0.53% | 0.38% | 0.20% |
| 720–739 | 0.87% | 0.66% | 0.46% | 0.23% |
| 700–719 | 0.99% | 0.78% | 0.55% | 0.25% |
| 680–699 | 1.21% | 0.96% | 0.65% | 0.28% |
| 660–679 | 1.54% | 1.28% | 0.90% | 0.38% |
| 640–659 | 1.65% | 1.33% | 0.91% | 0.40% |
| 620–639 | 1.86% | 1.42% | 0.94% | 0.44% |
National MI Monthly Advantage borrower-paid card MA.MN.BP.2022-03, effective 2022-03-01, 30-year fixed, at Fannie Mae's standard coverage; checked 2026-09-29. Applied to the base loan whenever LTV is above 80%; PMI is $0 at 80% LTV or below. A lender's live quote from an insurer's pricing engine can differ. FHA's annual MIP, by contrast, does not vary by credit score at all.
A worked crossover, step by step
Take a $350,000 home with 5% down ($17,500), financed at the Freddie Mac PMMS rate for the week of September 3, 2026 — 6.71% on a 30-year term. The base loan is $332,500, putting LTV at 95%.
Lay those side by side against the FHA total of $2,324 and the crossover point falls at the 720–739 band, where the two are $7 a month apart — inside the $30 this calculator calls "similar". A 760+ borrower pays $71 a month less on conventional; a 620–639 borrower pays $217 a month less on FHA. The down payment and home price never changed — credit score alone flipped which loan type wins.
Why FHA MIP can outlast conventional PMI even when FHA starts cheaper
Monthly cost is only half the comparison — the other half is how long you pay it. At 95% LTV, this calculator's amortization shows conventional PMI on the scenario above self-cancelling (balance falling to 80% of the home's price) after about 126 months, roughly 10.5 years, purely from normal principal paydown at 6.71%. FHA's annual MIP on this same 95%-LTV loan never gets that option: because the starting LTV is above 90%, this calculator prices it for the life of the loan, exactly as HUD's own cancellation rule requires.
That timeline gap is why the calculator's 5-year total-cost comparison and its lifetime comparison can point in different directions. Over 5 years (60 months), a 760+ conventional borrower pays $135,183 versus $139,433 for FHA — a $4,250 conventional advantage. A 640–659 borrower pays $150,977 conventional versus that same $139,433 FHA — now FHA is $11,544 cheaper, and even after PMI eventually cancels around year 10.5, a decade of higher monthly PMI on a lower credit score has already erased much of conventional's structural edge.
At 20% down, conventional PMI disappears — FHA's MIP doesn't
Down payment size changes this comparison too, and not symmetrically. Take the same $350,000 home, same 6.71% rate, but move to 20% down ($70,000), which puts LTV at exactly 80%.
That $148-a-month gap is the whole annual premium, and its source is what matters: conventional mortgage insurance turns off completely at 80% LTV, while FHA's does not. Put 20% down, 30% down, or more: on a 30-year FHA loan the annual rate does not drop below 0.50%. The only relief a bigger down payment buys is the clock — at 90% LTV or below the premium stops after 11 years (132 months) instead of running for the life of the loan. On this loan that is about $15,400 in MIP that a conventional loan at the identical down payment doesn't carry.
That's also why this calculator won't call a result close: it labels FHA and conventional "similar" only when their total monthly costs land within $30 of each other, and treats anything wider as a real winner. The $148 gap at 20% down clears that bar easily, so on this calculator's own logic, conventional is the call once you can put a fifth down — and on its numbers conventional is already cheaper per month at every credit tier from 15% down.
Why the two loan types cap out at different prices
The two programs also part ways on how much they'll insure. HUD sets the 2026 FHA floor at $541,287 for a one-unit home. Conventional loans backed by Fannie Mae and Freddie Mac follow a different, higher schedule: the FHFA set the 2026 baseline conforming limit at $832,750, roughly $291,000 above the FHA floor, with both programs sharing the same $1,249,125 ceiling in the highest-cost counties.
That gap matters for borrowers financing above the FHA floor but below the conforming baseline: FHA insurance simply isn't available past its county limit, while a conventional loan in that same price range stays inside standard conforming pricing rather than stepping up into jumbo territory. For most of this calculator's users — home prices well under $541,287 — that ceiling never comes into play, but it's worth checking your county's FHA limit before assuming both programs are on the table.
Neither premium is tax-deductible
Whichever side of the comparison wins, don't discount either monthly figure for an expected tax break. IRS Publication 936 is explicit: "the itemized deduction for mortgage insurance premiums has expired. You can no longer claim the deduction." That covers FHA's MIP and conventional PMI equally — both are full, after-tax costs in this comparison.
Methodology
FHA figures use this calculator's 1.75% upfront premium and HUD Mortgagee Letter 2023-05's annual MIP for terms over 15 years (0.50% at 95% LTV or below, 0.55% above; 0.70% / 0.75% for base loans above $726,200), cancelling after 11 years at 90% LTV or below; conventional figures price PMI from National MI's published Monthly Advantage borrower-paid rate card (MA.MN.BP.2022-03, effective March 1, 2022; confirmed September 30, 2026 as the insurer's current published card) by loan-to-value row and eight credit-score tiers, at Fannie Mae's standard coverage, with PMI removed at 80% LTV and a simulated monthly amortization to find the cancellation month. All worked figures use the September 3, 2026 Freddie Mac PMMS 30-year rate (6.71%) for both loan types, on a $350,000 purchase with 5% down. FHA and conforming loan limits are HUD's and FHFA's published 2026 figures.
Sources
- Freddie Mac — Primary Mortgage Market Survey, week ending September 3, 2026 — accessed 2026-09-05
- HUD — Mortgagee Letter, 2026 FHA Loan Limits (HUD No. 25-145) — accessed 2026-09-05
- FHFA — 2026 Conforming Loan Limit Values — accessed 2026-09-05
- IRS — Publication 936, Home Mortgage Interest Deduction (2025) — accessed 2026-09-05
- National MI — Monthly Advantage BPMI rate card MA.MN.BP.2022-03 (effective 2022-03-01) — accessed 2026-09-30
- HUD — Mortgagee Letter 2023-05, annual MIP rates (effective March 20, 2023) — accessed 2026-09-30
Frequently asked questions
When is an FHA loan better than conventional?
FHA loans are often better for buyers with credit scores below about 720, since conventional PMI rates climb steeply at lower scores: at 5% down the published rate card this calculator uses charges 0.78% a year at 700–719 and 1.42% at 620–639, while FHA's annual premium does not change with credit score. FHA is also more lenient on DTI ratios. However, FHA's lifetime MIP (for down payments under 10%) can make it more expensive long-term than conventional.
When is a conventional loan better than FHA?
Conventional loans are often better for buyers with 740+ credit scores: at 5% down, PMI on the rate card this calculator uses is 0.38% a year at 760+ and 0.53% at 740–759. Conventional PMI is cancelable once you reach 20% equity — unlike FHA MIP, which may last the life of the loan. With a 20% down payment, conventional loans have no mortgage insurance at all.
What credit score is needed for a conventional loan?
Most conventional loans require a minimum 620 credit score, though 680+ gets significantly better PMI rates. For the best conventional rates with no or low PMI, aim for 740+. FHA loans are available with scores as low as 580 (3.5% down) or 500 (10% down).
How does down payment affect FHA vs conventional choice?
At 3–5% down with credit below about 720, FHA typically wins on monthly cost. At 10% down the line drops to about 680: below it FHA still wins, above it conventional is as cheap or cheaper. From 15% down, conventional costs less per month at every credit tier on this calculator, and its PMI is cancelable. At 20%+ down, conventional is almost always better because there's no mortgage insurance at all, whereas FHA MIP is unavoidable regardless of down payment.
Can I switch from an FHA loan to a conventional loan?
Yes — refinancing from FHA to conventional is a common strategy to eliminate MIP once you have 20% equity. You'll need a 620+ credit score and sufficient equity to qualify for conventional. The savings can be significant: eliminating $200–$300/month in MIP often makes the refi worthwhile even with closing costs.