FHA Loan Calculator: Monthly Payment, MIP, and Total Cost vs Conventional

FHA loans are backed by the Federal Housing Administration and designed for buyers who can't qualify for conventional financing. The tradeoff is real: lower barrier to entry but mandatory mortgage insurance that adds to your monthly payment and total cost.

FHA Loan Basics

• Minimum down payment: 3.5% (with 580+ credit score)
• Minimum credit score: 580 for 3.5% down, 500 for 10% down
• Mortgage insurance: required regardless of down payment
• Debt-to-income limit: 43% back-end DTI (with some exceptions to 50%)
• Loan limits: vary by county, up to $1,209,750 in high-cost areas (2026)

FHA Mortgage Insurance Premium (MIP)

This is the defining cost of FHA loans. There are two MIP charges:

Upfront MIP: 1.75% of the loan amount, paid at closing or rolled into the loan.

Annual MIP: 0.55% of the loan amount per year, paid monthly. This continues for the life of the loan if you put less than 10% down. With 10%+ down, MIP drops off after 11 years.

Real Comparison: $350,000 Home, 3.5% Down FHA vs 5% Down Conventional

FHA Loan

• Home price: $350,000
• Down payment: 3.5% = $12,250
• Loan amount before upfront MIP: $337,750
• Upfront MIP (1.75%): $5,911 (rolled into loan)
• Total loan amount: $343,661
• Interest rate: 6.50% (FHA rates are typically slightly lower)
• Term: 30 years

| Cost Item | Monthly | Annual | |-----------|---------|--------| | Principal & Interest | $2,172 | $26,064 | | Annual MIP (0.55%) | $157 | $1,890 | | Homeowner's insurance | $125 | $1,500 | | Property taxes (est.) | $365 | $4,375 | | Total Monthly | $2,819 | |

Total interest paid over 30 years: $438,048 Plus upfront MIP: $5,911 Plus annual MIP (30 years): $56,700 True total cost of FHA loan: $799,659

Conventional Loan (5% Down)

• Home price: $350,000
• Down payment: 5% = $17,500
• Loan amount: $332,500
• Interest rate: 6.75% (conventional, 720+ credit score)
• PMI: 0.80% per year until 20% equity (about 9 years)
• Term: 30 years

| Cost Item | Monthly | Annual | |-----------|---------|--------| | Principal & Interest | $2,157 | $25,884 | | PMI (until 20% equity) | $221 | $2,660 | | Homeowner's insurance | $125 | $1,500 | | Property taxes (est.) | $365 | $4,375 | | Total Monthly (first 9 years) | $2,868 | | | Total Monthly (after PMI drops) | $2,647 | |

Total interest paid over 30 years: $444,488 PMI paid (9 years until 20% equity): ~$23,940 True total cost of conventional: $768,428

Side-by-Side Summary

| Factor | FHA (3.5% down) | Conventional (5% down) | |--------|----------------|------------------------| | Down Payment | $12,250 | $17,500 | | Upfront Cost | $12,250 | $17,500 | | Monthly Payment (initial) | $2,819 | $2,868 | | Mortgage Insurance Duration | Life of loan | ~9 years | | Total 30-Year Cost | ~$799,659 | ~$768,428 |

The conventional loan costs about $31,000 less over 30 years, but requires $5,250 more upfront and a higher credit score.

When FHA Makes Sense

• Credit score 580-679: Conventional rates will be penalized heavily. FHA is often better.
• Only have 3.5% for down payment: FHA is designed for this situation.
• Higher debt-to-income ratio: FHA has more flexibility, particularly for DTI 43-50%.
• Down payment assistance programs: Many state and local programs pair with FHA loans.

When Conventional Wins

• Credit score 720+: You'll get much better rates without FHA overhead.
• 20% down: No PMI at all on conventional. No reason to use FHA.
• 10%+ down with good credit: Conventional PMI drops off much faster than FHA MIP.
• Jumbo loan territory: FHA loan limits may not cover your purchase.

FHA MIP Removal

If you put less than 10% down on an FHA loan closed after June 2013, the MIP never drops off. You'd need to refinance into a conventional loan once you have 20% equity to eliminate mortgage insurance.

That refinance comes with closing costs (typically $3,000-$6,000) and requires qualifying at the current rates at that time. Factor this into your long-term cost calculation.

Run the Numbers

Use the Mortgage Calculator to model your specific FHA or conventional loan scenario. Compare monthly payments, total interest, and PMI/MIP costs side by side.