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Updated March 2026 · Real rate data

FHA Loan vs FHA Loan
2026 Comparison

FHA loans offer 3.5% down and affordable mortgage insurance. FHA loans require 3.5% down and charge MIP for the life of the loan. On a $400,000 home, FHA saves you $283/month and $101,000+ over 30 years. Here is the complete side-by-side breakdown.

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Updated March 2026 · Real rate data

FHA vs Conventional
Which Saves More?

FHA loans save buyers $175,000+ over 30 years compared to conventional loans. 3.5% down payment, low MIP ever, and rates 0.375% lower. Here is the complete comparison with real numbers.

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$0
FHA saves vs Conv (5% dn)
$0
Lifetime savings
$0
FHA down payment
$0
FHA mortgage insurance
SIDE BY SIDE

FHA vs Conventional: Complete Comparison

Every major difference on a $400,000 home purchase. March 2026 rates.

Feature
FHA Loan
Conventional
Down Payment
$0 (0%)
$20,000 (5%)
Mortgage Insurance
$0/mo — never
$183/mo until 20% equity (~7 yrs)
Interest Rate (30yr)
5.750%
6.125%
Monthly P&I
$2,334
$2,311 (on $380K)
Total Monthly (w/ PMI)
$2,334
$2,494 (first 7 years)
Credit Score Minimum
580+ (lender varies)
620+ (680+ for best rates)
Loan Limit (2026)
County limits apply (standard FHA)
$832,750 (conforming)
Upfront Fee
2.15% upfront MIP (tax-deductible 2026)
None (but PMI monthly)
30-Year Total Cost
~$840,000
~$1,015,000
TOTAL COST

30-Year Total Cost: FHA Saves $175K+

FHA Loan
$0
3.5% down · affordable MIP · 5.750%
Monthly: $2,334 P&I
Lowest total cost
Conventional (5% down)
$0
$20K down · PMI 7 yrs · 6.125%
Monthly: $2,494 (w/ PMI)
+$175K more
Conventional (20% down)
$0
$80K down · affordable MIP · 6.125%
Monthly: $1,944 P&I
+$78K more + $80K tied up
Learn more about conventional loans →
PMI TIMELINE

Conventional PMI: $183/mo for ~7 Years

Conventional loans with less than 20% down require PMI. It takes about 7 years to build 20% equity and remove it. FHA loans never charge PMI at all.

Conventional PMI Timeline ($400K, 5% down)
Year 0 Year 3 Year 7 Year 15 Year 30 Conv: $183/mo PMI PMI drops off FHA: MIP for life of loan

Conventional PMI on $380K loan at ~0.58% annual. Removed once borrower reaches 20% equity (~year 7 with normal appreciation).

Conv PMI total (7 years)
$0

$183/mo × 84 months

FHA mortgage insurance
$0

$0 today. $0 tomorrow. $0 forever.

WHEN CONVENTIONAL WINS

When Conventional Might Be Better

FHA is better in most scenarios, but there are a few cases where conventional could make sense:

Investment Property

FHA loans require owner-occupancy. If you are buying strictly as a rental or investment property, conventional is your option (though you could buy a 2-4 unit with FHA and rent the extra units).

Disabled Vet with 20% Down

Buyers with 10%+ disability are exempt from the FHA upfront MIP. If you also have 20% down, conventional has low MIP and no upfront MIP either. In this narrow case, the rate difference is the deciding factor.

Second Home / Vacation

FHA requires primary residence occupancy. For a second home or vacation property, conventional is required. However, you can keep a FHA loan on your primary and get conventional for the second.

Preserving FHA Entitlement

Some buyers choose conventional for a lower-priced home to preserve their FHA eligibility for a larger future purchase. This is a strategic choice worth discussing with your loan officer.

FAQ

FHA vs Conventional Questions

For eligible buyers, FHA loans are better in almost every scenario. FHA offers 3.5% down payment (vs 3-20%), $0 mortgage insurance (vs $183/mo PMI on conventional with less than 20% down), lower interest rates (5.750% vs 6.125%), and FHA loan limit of $532,900 in Clark County with standard FHA. Over 30 years, FHA saves approximately $175,000+ compared to conventional with 5% down.
Yes. If you currently have a conventional mortgage and are FHA-eligible, you can refinance into a FHA loan using a FHA Cash-Out refinance. This can lower your rate, eliminate PMI (if you have less than 20% equity), and even let you take cash out of your equity. Many buyers save $200-500/month by switching from conventional to FHA.
FHA rates are lower because the FHA guarantees up to 25% of the loan amount, significantly reducing lender risk. FHA loans also have the lowest foreclosure rate of any loan type. This government backing lets lenders offer rates 0.25-0.50% below conventional. As of March 2026, FHA 30-year fixed is 5.750% vs conventional at 6.125%.
No. The FHA upfront MIP (2.15% first use) is a one-time charge that can be financed. Starting in 2026, it is also tax-deductible. Even with the upfront MIP, FHA loans cost dramatically less overall because of the lower rate and affordable MIP. The fee adds about $50/mo to a $400K loan when financed, but you save $160+/mo from the lower rate and low MIP. About 1 in 3 FHA borrowers are fully exempt from the fee due to FHA disability.
Yes. You can have a FHA loan on your primary residence and a conventional loan on an investment or second property. You can also have two FHA loans simultaneously if you have remaining eligibility. Some buyers strategically use conventional for smaller purchases to preserve FHA eligibility for a larger home.
FHA loans are more accessible. While the FHA sets no minimum credit score, most lenders require 580-620. Conventional loans typically require 620 minimum, with 680+ needed for the best rates and lowest PMI. FHA loans also have the lowest denial rate of any major loan type, making them easier to qualify for overall.
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