FHA Loan Calculator
Estimate your FHA mortgage costs including upfront and monthly mortgage insurance premiums. Compare FHA vs conventional loans side-by-side.
A 620-679 score qualifies you for both FHA and conventional loans. FHA may offer a lower down payment, but conventional could have lower total costs if you can put 10%+ down.
Understanding FHA Loans
FHA loans are mortgages insured by the Federal Housing Administration, a government agency within the U.S. Department of Housing and Urban Development. They are designed to help first-time homebuyers and borrowers with lower credit scores or limited savings achieve homeownership. FHA loans are not issued by the government directly -- they are originated by FHA-approved lenders (banks, credit unions, mortgage companies) and insured by the FHA, which protects lenders against losses if borrowers default.
To qualify for an FHA loan, you generally need a credit score of at least 580 for the minimum 3.5% down payment. Borrowers with scores between 500 and 579 may qualify with 10% down. FHA loans have more flexible debt-to-income ratio requirements than conventional loans, typically allowing up to 43% (and sometimes higher with compensating factors). You must also use the home as your primary residence -- FHA loans cannot be used for investment properties or vacation homes.
The key cost unique to FHA loans is Mortgage Insurance Premium (MIP). There are two components: an upfront MIP of 1.75% of the loan amount (which is typically financed into the loan) and an annual MIP that ranges from 0.80% to 0.85% depending on your loan-to-value ratio. Unlike conventional PMI, which automatically drops off at 20% equity, FHA MIP remains for the life of the loan if your initial down payment is less than 10%. If you put 10% or more down, MIP can be removed after 11 years.
FHA vs conventional comes down to your specific situation. FHA loans win when you have a lower credit score (below 680), limited savings for a down payment, or higher debt ratios. Conventional loans win when you have good credit (680+), can put 10-20% down, or want to avoid lifetime mortgage insurance. Many buyers start with FHA and refinance to conventional once they build equity and improve their credit -- this eliminates the ongoing MIP cost.
FHA loans make the most sense for first-time buyers with credit scores in the 580-680 range who need the lower down payment and more flexible qualification standards. If your score is above 720 and you can manage a 5-10% down payment, run the numbers on conventional -- you will likely save money over the life of the loan due to lower insurance costs and the ability to drop PMI at 20% equity.