FHA and conventional loans serve different buyer profiles. This calculator runs both side by side — same home price, same rate assumptions — so you can see the actual difference in monthly payment, mortgage insurance, and total cost before you choose.
FHA vs. Conventional: Key Differences
| FHA | Conventional | |
|---|---|---|
| Minimum credit score | 580 (3.5% down) or 500 (10% down) | 620 (most lenders) |
| Minimum down payment | 3.5% | 3–5% (program-dependent) |
| Upfront mortgage insurance | 1.75% of loan (financed) | None |
| Annual mortgage insurance | 0.55%/year (most cases) | Depends on LTV and credit score |
| Mortgage insurance removal | Life of loan if LTV > 90% | Removed at 80% LTV |
| Loan limits | Set by FHA annually by county | Set by FHFA (conforming limits) |
| Property condition | Stricter appraisal requirements | More flexible |
| Debt-to-income flexibility | More lenient (up to 50% in some cases) | Typically 43–45% max |
When FHA Makes Sense
- Credit score below 680 — FHA rates are often lower at this tier, offsetting some MIP cost
- Limited down payment — 3.5% vs. 5% is meaningful on a $250,000 home ($500 difference)
- Seller is motivated to help — FHA allows seller contributions up to 6% of sale price
When Conventional Makes Sense
- Credit score 700+ — conventional PMI rates drop significantly at higher scores
- Down payment of 10%+ — PMI cost decreases and removal comes sooner
- Planning to stay long-term — avoiding FHA’s life-of-loan MIP is a significant long-term saving for buyers who put less than 10% down
- Property condition concerns — conventional appraisals are less strict than FHA
This calculator provides estimates for comparison and educational purposes only. Actual rates, PMI premiums, and MIP rates vary by lender, loan scenario, and market conditions. FHA guidelines and loan limits change periodically. Consult a licensed Alabama mortgage lender for actual loan comparisons. Equal credit opportunity is available to all — we do not discriminate on any basis prohibited by law.
Not sure which loan type fits your situation?
I can refer you to AHFA-approved lenders, DSCR lenders for investment purchases, or jumbo lenders for higher-priced properties — depending on what you're buying. Let's start with a conversation about what you're looking for.
Get in Touch →Milton Christ, REALTOR® | naf Cash Certified | Keller Williams Alabama Gulf Coast | AL License #172097
