The mortgage insurance difference
Conventional PMI is cancellable. Reach 20% equity and it comes off, either automatically or on request once you can show the value. FHA's does not work that way under 10% down.
There is also no upfront premium financed into the balance. On a $300,000 FHA loan that upfront charge is over $5,000 added to what you owe from day one.
- As little as 3% down for qualified buyers
- PMI is cancellable at 20% equity
- No upfront mortgage insurance premium
- Pricing improves sharply with credit score
Where it stops being the cheaper option
Conventional prices credit aggressively. In the low 600s the rate and PMI both get expensive fast, and FHA usually wins.
The crossover is somewhere in the high 600s and it moves with the market. Pricing both is a ten minute job and it is the only way to answer it honestly for your file.
Reaching 20% faster than you think
Equity comes from paying down the balance and from the house appreciating. In parts of DeSoto and Shelby County the second has been doing more work than the first.
If you are close, an appraisal to remove PMI can pay for itself in a few months. It is worth a check rather than paying it by default.
Questions people ask
Do I need 20% down for a conventional loan?
No. That is the most persistent myth in the business. Qualified buyers can go as low as 3% down; 20% is the point where mortgage insurance stops.
How do I get rid of PMI?
At 20% equity you can request it, and at 22% it drops automatically. If value has risen, an appraisal can get you there sooner.
Is conventional always cheaper than FHA?
No. Below roughly the high 600s in credit score FHA is often cheaper. Both should be priced before you choose.
This is not a commitment to lend. All loans are subject to credit approval, income and asset verification, property appraisal, and program guidelines. Rates, terms, programs and eligibility are subject to change without notice.
Get your numbers
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