Interactive Tool
FHA vs Conventional, your numbers.
Two loans, two different insurance systems, and neither wins for everyone. This shows which fits your situation. Not a quote, not a recommendation.
What rates should I enter for each loan? ›
- Builders push the FHA rate as about half a point lower than conventional.
- The real gap is usually 0.125% to 0.25%. Strong credit (740+) can beat it on a conventional loan.
- Compare the full payment with insurance, not the headline rate.
Your Situation
The Home
Why this matters: conventional's PMI falls off once you reach 20% equity. Faster appreciation gets you there sooner, which is part of why conventional often wins in a strong market.
Conventional · uses PMI
Private mortgage insurance. One monthly charge, no upfront cost. Cancels at 20% equity. Priced on your credit.
- Priced on your credit score.
- Rough monthly rate: ~660 ≈ 1.1%, ~720 ≈ 0.6%, ~780 ≈ 0.3% of the loan per year.
- No upfront cost.
- Cancels automatically once you reach 20% equity.
FHA · uses MIP
Mortgage insurance premium. A fixed upfront cost (financed in) PLUS a monthly cost that lasts the life of the loan with under 10% down.
1.75% of loanFixed by FHA
- Set by HUD, the same for every credit score.
- At 3 to 5% down (most buyers): 0.55% of the loan per year.
- Upfront fee of 1.75%, rolled into the loan.
- With under 10% down, it lasts the life of the loan. Only a refinance removes it.
Time Horizon
Refinancing ends FHA's lifetime MIP. Toggle to see how it changes the outcome.
1What will each loan cost me month to month?›
Day to day, FHA feels like the cheaper loan: less down, lower payment. Here's the gap you'd actually feel.
At the start, the lower monthly payment is
FHA$0/mo
After conventional's PMI drops at yr 3.6
CONV$0/mo
Conventional
Insurance: PMI (removable)
$0
starting monthly payment
Home price$0
Down payment$0
You finance$0
PMI / mo $0
PMI ends —
FHA
Insurance: MIP (upfront + monthly)
$0
starting monthly payment
Home price$0
Down payment$0
Base loan$0
+ Upfront MIP (1.75%)$0
You finance$0
MIP / mo $0
MIP ends Life of loan
Your monthly payment over time
FHA flat, conventional steps down when PMI cancels at 20% equity. Solid to your exit, faint after.
Conventional
FHA
Key moments
2So which one actually wins, and why?›
Here's the only thing that matters: where the two loans differ. Each line shows who's cheaper and by how much, figured to your sale at year 10.
Conv cheaper
FHA cheaper
FHA Upfront MIP, financed into the loan
A one-time premium conventional doesn't charge. Repaid when you sell or refinance.
Slightly different loan balances left to pay off at exit.
FHA Larger down payment
Equity you keep, not money lost. Counted because it's cash in at closing.
Totals
$0
$0
Net difference at year 10
Conventional$0
That's the whole decision in one number. The questions below trace it across every year, so you see exactly when it tips.
3When do I come out ahead?›
When you feel the cash, and who's ahead
Your down payment isn't here, it's equity you keep, not money spent. The line tracks which loan has cost you less so far. FHA's upfront premium is financed, so you don't feel it until you sell or refinance. That's the jump at the end.
↘ Line falling = FHA is the cheaper payment that stretch
↗ Line rising = Conventional is the cheaper payment that stretch
And the line's height is the running total: above the center line, conventional has cost you less so far. Below it, FHA has.
4What if I sell or refinance at a different year?›
The day you sell or refinance, every difference becomes real cash. Here's the actual gap between the two loans, year by year.
Cost difference at the year you leave
The dollar gap between the two loans at each exit year. Above the line, conventional costs less. Below it, FHA does. Solid to your exit, faint after.
↘ Line falling = FHA is the cheaper payment that stretch
↗ Line rising = Conventional is the cheaper payment that stretch
And the line's height is the running total: above the center line, conventional has cost you less so far. Below it, FHA has.
Why no separate "after I sell the home" view? The home is worth the same whether you financed it FHA or conventional, so that value cancels out of the comparison. This gap is your true cost difference either way.
5How low would the FHA rate have to go to win?›
How big an FHA rate discount would it take to win?
How much lower the FHA rate must go to actually win if you sell at year 10. Your current gap is marked. Where the line crosses zero is the tipping point.
6What's my full monthly payment, with taxes and everything?›
These costs are the same for both loans, so they do not change which loan wins. They only change your total monthly payment. Added here so you can budget the real number.
Denver metro typically 0.55–0.65%, but ranges roughly 0.4–1.2% by neighborhood and metro-district fees (newer builds run higher).
Conventional · full payment
Principal, interest + PMI $0
Property tax $0
Home insurance $0
HOA $0
Total / mo $0
FHA · full payment
Principal, interest + MIP $0
Property tax $0
Home insurance $0
HOA $0
Total / mo $0
7How much does home appreciation matter here?›
Home prices since 1995
All three start at 100 in 1995, so it's a fair comparison. The higher a line climbs, the more those homes appreciated.
Denver
Colorado
U.S.
Yearly appreciation rate
The percent change each year, including the down years. Helps you judge what number to expect.
Denver
Colorado
U.S.
- Denver metro: ≈ 5.4%/yr over 30 years (FHFA Denver), though roughly flat right now (Case-Shiller).
- Colorado ≈ 5.6%/yr, U.S. ≈ 4.3%/yr over 50 years (FHFA). Fed target is 2%.
- Past results don't guarantee future ones. Pick a rate you believe in.
8So which one fits me?›
This tool focuses on cost, but cost isn't the only factor. Here's an honest read on who each loan tends to serve. Your lender can confirm what you qualify for.
Conventional often fits if
- You have strong credit (about 720+). PMI is priced on credit, so good credit makes it cheap and it cancels at 20% equity.
- You plan to stay a while, or expect normal appreciation. Both let the PMI fall off and conventional pull ahead.
- You want the flexibility to drop insurance without refinancing.
FHA often fits if
- Your credit is lower (roughly 580–680). FHA's MIP is fixed regardless of credit, so it can cost less than conventional PMI at those scores.
- Conventional approval is tight. FHA's looser credit and debt-to-income standards are sometimes what makes buying possible at all.
- You expect a short stay in a flat market, where the lower payment wins before the upfront cost catches up.
- A lower payment early helps your budget, especially if you expect your income to rise or want to keep cash free for the move, repairs, or savings.
A common path: start with FHA to get into the home, then refinance into a conventional loan once your credit or equity improves. That ends the lifetime MIP. The refinance toggle above shows how that changes the math.
One more angle for the long-term thinker: a dollar saved early can be worth more than a dollar saved later, since money kept now can be invested or earn interest. If FHA's lower early payments free up cash you'd actually put to work, that tilts slightly in its favor beyond the raw totals above. If you'd just spend it, ignore this.
Benjamin Urban
Broker Associate · REALTOR® · Licensed Fiduciary
Urban Companies Real Estate
Honest Guidance. Confident Decisions.