Is FHA cheaper than conventional?

Short term yes, long term often no. FHA is cheaper to qualify for (3.5 percent down, lower credit threshold) but the mortgage insurance lasts the life of the loan if down payment is under 10 percent. Conventional PMI cancels at 80 percent LTV. Over 30 years conventional often costs less.

Can I refinance from FHA to conventional later?

Yes, and many buyers do. Once your equity reaches 20 percent through paydown or appreciation, you can refinance to a conventional loan to drop the MIP. The refinance has closing costs but saves on monthly MI.

What is the VA funding fee?

A one-time fee of 2.15 percent of the loan amount (first use) or 3.3 percent (second use). It is usually rolled into the loan rather than paid at closing. VA loans have no PMI ever, which more than offsets the funding fee for almost everyone.

Do FHA and VA loans have higher interest rates?

Slightly lower, actually. FHA and VA rates typically run 0.125 to 0.375 percent lower than conventional because they are government-backed. Talk to GoldCoast for current rate quotes.

FHA vs Conventional vs VA Loan Calculator

FHA, Conventional, or VA: which loan costs you less?

FHA loans take 3.5% down but charge MIP for the life of the loan. Conventional loans need 5%+ down and PMI cancels at 80% LTV. VA loans require service eligibility but have no PMI and a one-time funding fee. Compare them side by side.

Home price

Down payment you can put down

Estimated interest rate (%)

Use a single rate to compare apples to apples. Actual rates differ a small amount across loan types.

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FHA MIP: 0.55% annual + 1.75% upfront on a 30-year loan, lasts the life of the loan when down payment is under 10%. Conventional PMI: rate scales with LTV and credit, cancels at 80% LTV. VA funding fee: 2.15% for first-time use (rolled in or paid at closing), no monthly MI. Actual rates and fees vary by lender and program.

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The three big loan types in plain language

Conventional

The default option. Backed by Fannie Mae or Freddie Mac. Requires 5 percent down minimum (3 percent for some first-time-buyer programs). PMI required when down payment is below 20 percent, but PMI cancels automatically when you reach 80 percent loan-to-value. Best for buyers with strong credit (typically 700+) and at least 5 percent down.

FHA

Government-backed by the Federal Housing Administration. Requires 3.5 percent down. Easier credit qualification (works down to 580 FICO with 3.5 percent down, or 500 FICO with 10 percent). The catch: mortgage insurance (called MIP) is required, and it lasts the life of the loan if down payment is under 10 percent. You cannot drop it the way you can drop conventional PMI. Best for buyers with limited down payment cash or credit scores below 680.

VA

Available only to veterans, active military, and qualifying spouses. No down payment required. No PMI ever. One-time funding fee of 2.15 percent (or 3.3 percent for second use), which is usually rolled into the loan. Best loan type in the country if you qualify.

How to read your comparison

The calculator above highlights the cheapest eligible option for your scenario. The monthly cost difference between FHA and conventional can be meaningful, especially over the long run. FHA is cheaper at low down payments and weaker credit because the upfront barrier is lower, but conventional often wins on lifetime cost because PMI cancels at 80 percent LTV. VA wins for anyone eligible.

What this does not factor

The calculator uses a single rate across all three loan types. In reality, FHA and VA rates typically run 0.125 to 0.375 percent lower than conventional. Closing costs vary slightly. Your real numbers depend on credit, debt-to-income, and lender. Talk to GoldCoast for binding side-by-side estimates on your scenario.

Related guides at GoldCoast

All mortgage calculators: the full suite of tools
Massachusetts mortgage calculators: MA-specific tools
New Hampshire mortgage calculators: NH-specific tools
Maine mortgage calculators: ME-specific tools
PMI calculator: see what conventional PMI costs at different down payments
MassHousing eligibility calculator: check MA first-time-buyer programs that can lower cost further
First step to buying a home: start your conversation with GoldCoast

FHA vs Conventional vs VA Loan Comparison Calculator