What You Need to Know
💡Why This Calculator Matters
FHA loans make homeownership accessible with just 3.5% down and flexible credit requirements. But the lifetime mortgage insurance adds significant cost.
👤Who Needs This
First-time homebuyers with limited savings, those with credit scores 580-680, or anyone comparing FHA to conventional loans.
🎯Key Insight
FHA mortgage insurance stays for the life of the loan (if putting less than 10% down). Conventional PMI drops at 20% equity.
⚠️Common Mistake
Assuming FHA is always cheaper because of low down payment. Over time, permanent MIP can cost more than conventional PMI that drops off.
✅Pro Tip
If your credit score is 680+, get quotes for both FHA and conventional with 5% down. Conventional might be cheaper long-term despite higher PMI initially.
📊Real-World Example
Scenario: $300,000 home with 3.5% down ($10,500)
FHA MIP: 0.55% annually = $1,592/year ($133/month) for life of loan
Over 30 years: $47,760 in MIP alone. Conventional at 5% down might save $15,000+ with PMI that drops at 78% LTV.
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