FHA vs. Conventional. The honest math.

Yes, and it's a common strategy. Many borrowers use FHA as an entry-point loan when their credit or cash position is weaker, then refinance to Conventional once they qualify — typically 2-4 years later.

Two common triggers for the FHA-to-Conv refi:

(1) Credit improvement: FICO crosses 720+ and Conventional PMI pricing now beats FHA's MIP, even with the refi closing costs amortized.

(2) Equity reaches 20% (through home appreciation + amortization): refi into Conventional with no PMI at all. This is the most common reason — and the most valuable.

The refi requires full underwriting and ~$3K-$8K in closing costs. Generally worth it if you'll own the home 3+ more years after the refi.

Different programs, different rules.

Conventional PMI is governed by the federal Homeowners Protection Act of 1998. The law requires lenders to automatically cancel PMI when the loan-to-value ratio reaches 78% based on the original amortization schedule, and to terminate at the midpoint of the loan term (year 15 of a 30-year). Borrowers can also request cancellation at 80% LTV.

FHA MIP isn't governed by HPA — it's a HUD policy. In 2013, HUD changed FHA rules so MIP runs for the life of the loan if down payment was less than 10%. With 10%+ down, MIP runs 11 years, then drops.

Why the difference? Conventional PMI is a private insurance product covering the lender. FHA MIP funds the FHA insurance pool that backs the program. Different funding mechanisms, different cancellation rules.

700 is the inflection point — it depends on the other variables.

At 700 FICO with low down payment (3-5%), Conventional PMI prices at ~0.85% annually. FHA MIP is 0.55% annually. So FHA is cheaper monthly.

BUT — Conventional PMI cancels at 78% LTV (year 6-8 typically). FHA MIP runs forever (less than 10% down). So over 7+ years of ownership, Conventional usually wins on total cost.

The decision tool above models this for your specific numbers. For most 700-FICO files planning to own 7+ years, Conventional wins. For shorter horizons, FHA wins.

Almost never. At 20% down, Conventional has zero PMI. FHA still charges 1.75% upfront MIP and 0.50% annual MIP regardless of down payment.

FHA at 20% down only makes sense in two narrow cases:

(1) Your credit is below 620 (Conventional's floor), so Conventional simply isn't available.

(2) The property has condition issues that fail Conventional appraisal but pass FHA — though if it fails Conventional, it usually fails FHA too.

If you have 20% down and 620+ credit, Conventional is the answer. The MIP cost on FHA isn't worth the slightly lower rate.

Yes — both stack with state DPA. Most state HFA down-payment-assistance programs work with FHA as the first mortgage. Many also work with Conventional 97 and HomeReady.

One caveat: at low credit tiers (below 660), Conventional PMI prices so high that even with DPA, FHA usually beats Conv 97. The DPA grant amount is the same in either program — but the underlying first-mortgage cost is what determines total payment.

For state-specific DPA program structures and which loans they stack with, see our DPA Programs page.

If you're VA-eligible, VA almost always beats both FHA and Conventional. $0 down, no monthly mortgage insurance ever, lower rates than Conventional, and a one-time funding fee that's lower than FHA's lifetime MIP cost. This page exists for borrowers who can't use VA.

If you served in the military (active duty, veterans, National Guard with 6+ years, qualifying surviving spouses), start with VA. See our VA Loan page or run the Find Your Fit diagnostic to confirm eligibility.

If you're not VA-eligible, then this FHA-vs-Conventional comparison is the right one for you.