PMI vs MIP Comparison Calculator
Compare Private Mortgage Insurance (PMI) on conventional loans vs Mortgage Insurance Premium (MIP) on FHA loans. Same idea — different rules. The lifetime cost difference can hit $20K-$50K+.
PMI vs MIP — Key Differences
Conventional PMI: Required when down payment <20%. Cost: 0.3-1.5% of loan annually (depends on credit score and LTV). Removable at 80% LTV by request, automatic at 78%. Average duration on loan: 6-15 years. MIP (FHA): Required on all FHA loans. Two parts: Upfront MIP 1.75% of loan amount + Annual MIP 0.45-0.85% of balance. With <10% down, MIP for LIFE of loan. With 10%+ down, MIP for 11 years.
Real Cost Comparison
$350K loan, 5% down ($17,500). Conventional 30-year at 7.0%: $2,800 PMI/year × 7 years until 80% LTV = $19,600. FHA 30-year at 6.75% (FHA usually slightly lower rate): $6,125 UPMIP + $2,700 annual × 30 years = $87,125. FHA total = $87K vs Conventional $20K. Difference: $67K over loan life. FHA's main advantage: down payment 3.5% (vs 5% conventional min), more lenient credit (580+ vs 620+).
When FHA Beats Conventional
(1) Credit score 580-660: FHA pricing significantly better — conventional PMI quote at 660 credit is brutally expensive. (2) Down payment 3.5% but not 5%: FHA only option. (3) High debt-to-income (45-50%): FHA more flexible. (4) Past credit issues: FHA looks back 2 years for bankruptcy, 3 for foreclosure (conventional 4+/7+). For these scenarios, FHA cheaper upfront despite lifetime MIP cost — buyer wouldn't qualify for conventional anyway.
Strategy: FHA Now, Refinance Later
Common play: take FHA loan today, pay MIP, refinance to conventional when (a) Credit improves to 660+, AND (b) Loan-to-value drops below 80% (via payments + appreciation). Refinancing eliminates MIP. Net result: get FHA's lenient qualification today, escape lifetime MIP via refi in 3-5 years. Works in flat/rising market; fails if rates spike and refi cost exceeds savings. Always model refi breakeven before assuming this path.
PMI vs MIP Comparison Calculator: 2026 Numbers After the FHA MIP Cut
The PMI vs MIP comparison calculator above uses the post-March 2023 FHA annual MIP rates (lowered 30 bps to 0.55% on most 30-year >95% LTV loans per FHA Mortgagee Letter 2023-02), which materially changes the break-even vs conventional PMI in 2026 — the spread is roughly $1,250/year on a $400K loan instead of $2,400/year pre-2023. Conventional PMI rates are CFPB-tracked at 0.3%–1.5% of loan depending on credit + LTV; pull a real PMI quote from your lender (LPI factor) before assuming the rack rate.
When Conventional PMI Beats FHA MIP (Even at Low Down)
If your credit score is 720+ AND you can stretch to 5% down, conventional almost always wins in 2026 — Fannie Mae's PMI factor at 720+ credit on 95% LTV runs ~0.55%, which roughly equals current FHA annual MIP but is REMOVABLE at 80% LTV under the Homeowners Protection Act. FHA MIP at <10% down stays for the life of the loan. The PMI vs MIP comparison calculator flips conventional-favored at roughly 720 credit + 5% down + 7-year hold; FHA-favored at credit <680 OR 3.5% down. Run yours at the exact credit/down combo — the gray-zone is narrower than most blog posts suggest.
Sources: HUD FHA Mortgagee Letter 2023-02, CFPB Conventional Loans Guide, HUD FHA Handbook 4000.1. Last updated 2026-06-30.
Frequently Asked Questions
PMI vs MIP \u2014 what's the difference?
PMI: conventional loan insurance, removable at 80% LTV. MIP: FHA loan insurance, includes upfront 1.75% + annual. With <10% down, MIP for LIFE of loan.
Why is FHA MIP for life?
Since 2013, FHA charges MIP for life of loan if down payment <10%. Escape only via refinance to conventional. FHA's trade-off for low down payment + lenient credit.
When does FHA beat conventional?
Credit 580-660 (conventional PMI brutally priced), down payment 3.5%, high DTI (45-50%), past credit issues 2-4 years old. For these scenarios, FHA only realistic option.
Should I refinance from FHA?
Yes when (1) Credit improves to 660+, AND (2) LTV drops below 80%. Refinance to conventional eliminates MIP. Model breakeven on closing costs before refinancing.
Is this tool free?
Yes. 100% free, no sign-up. All math runs in your browser \u2014 your loan data never leaves your device.
PMI vs MIP comparison calculator \u2014 does it use 2026 FHA rates?
Yes. FHA annual MIP defaults to 0.55% for the standard 30-year 95%+ LTV case after the March 2023 30-bps cut (HUD ML 2023-02). Override the field if your scenario is <15-year, <95% LTV, or non-standard. UPMIP stays at 1.75% \u2014 unchanged since 2013.
Should the conventional PMI input be the monthly or annual rate?
Annual rate, as a percent of original loan amount. Lender LPI quotes commonly come as monthly $ \u2014 multiply by 12 then divide by loan amount and multiply by 100 to convert. A $190/mo PMI on a $342K loan = $2,280/yr = 0.667% annual. Plug 0.667 in.
Why does the calculator output 'Conventional wins' even at 5% down?
Because conventional PMI is removable at 78% LTV (auto) or 80% LTV (request) under the Homeowners Protection Act, while FHA MIP stays for the loan life at <10% down. Even if FHA's monthly is lower today, conventional's total-cost win compounds over 6\u201310 years. The calculator includes that PMI-removal timing.