FHA MIP vs Conventional PMI Calculator
FHA loans carry an upfront mortgage insurance premium plus an annual premium that on most loans never cancels. Conventional PMI drops off at 80 percent equity. Which costs less depends on credit score, down payment, and how long you keep the loan. Enter both scenarios above to compare.
Your loan and value
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month 0, when the balance reaches 80% of the original price
- Starting loan-to-value
- 0%
- Monthly principal & interest
- $0.00
- Servicer must cancel (78%)
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- Midpoint backstop
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- Extra payments pull it forward
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Cancellation at 80% is a request you must make in writing and the servicer can require proof of value and a clean payment record. Termination at 78% is automatic. Both are set by the Homeowners Protection Act, cited below.
The FHA Insurance Structure
FHA mortgage insurance has two components. The upfront premium increases your loan balance from day one, so you pay interest on that added amount across the entire term. The annual premium is split into monthly charges layered on top of your principal-and-interest payment.
Under current HUD rules, borrowers who put less than 10 percent down on an FHA loan pay the annual premium for the full life of the loan. Only those starting with at least 10 percent down see the premium expire after 11 years. This stands in sharp contrast to conventional loans, where the Homeowners Protection Act requires PMI cancellation at 78 percent loan-to-value automatically — or at 80 percent upon borrower request.
Because the upfront premium is typically rolled into the balance, many borrowers do not feel its cost at closing. But over 30 years, financing that amount generates thousands in additional interest that a conventional borrower with no upfront charge never pays.
Choosing Between the Two
Conventional PMI generally costs less in total for borrowers with credit scores above 720. Insurers price conventional premiums by credit-score band and LTV, so a strong-credit borrower with 10 percent down can often secure a lower monthly premium than FHA — and that premium eventually disappears at 80 percent LTV.
FHA may still be the better route for buyers whose scores sit below 680, where conventional PMI rates climb steeply, or for those who can only manage a 3.5 percent down payment and do not qualify for competitive conventional terms. The lower FHA down-payment threshold puts homeownership within reach when savings are thin.
The crossover question is time. If you plan to sell or refinance before conventional PMI would have cancelled, shorter exposure can make FHA reasonable. For long holds, conventional wins on lifetime cost. Use the calculator alongside the PMI removal timeline tool to see how appreciation shifts the cancellation date under each path.
FHA MIP duration rules above apply to case numbers assigned after June 2013. Earlier loans follow prior cancellation policies.