Conventional Mortgage Calculator

What Is a Conventional Mortgage?

A conventional mortgage is a home loan that is not insured or guaranteed by a government agency (FHA, VA, or USDA). Conventional loans follow guidelines set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that purchase most conventional mortgages from lenders. They are the most common type of home loan in the United States and typically offer the best interest rates for borrowers with strong credit and a down payment of at least 5 percent.

Compared to FHA loans, conventional mortgages have stricter qualification requirements but more flexible mortgage insurance rules. The biggest advantage: PMI on a conventional loan can be removed once you reach 80% loan-to-value, while MIP on most FHA loans lasts for the life of the loan. On a $400,000 loan with 5% down, removing PMI at year 10 saves roughly $13,000 in insurance premiums compared to FHA MIP. Use the conventional loan calculator above to see exactly when PMI cancels for your scenario.

Conventional Loan Requirements (2026)

• Credit score: Minimum 620 for most conventional programs. Borrowers with 740+ get the best rates; borrowers below 680 may pay significantly higher PMI.
• Down payment: As low as 3% for first-time buyers via Fannie HomeReady® or Freddie Mac Home Possible®. Standard conventional loans require 5%.
• Debt-to-income (DTI): Maximum 45-50% depending on lender overlay; strongest borrowers stay under 36%.
• Loan limits: $832,750 baseline conforming limit in 2026, up to $1,249,125 in high-cost counties. Above the limit, it becomes a jumbo loan.
• PMI: Required if down payment is less than 20%. Auto-cancels at 78% LTV per the Homeowners Protection Act.

How PMI Works on Conventional Loans

Private mortgage insurance (PMI) protects the lender — not you — in case you default. It is required on conventional loans when your down payment is less than 20% of the home's value. PMI annual premiums range from roughly 0.19% to 1.95% of the original loan amount, based on three factors:

1. Down payment percentage — more equity means lower PMI.
2. Credit score — higher FICO means lower PMI. A 760-score borrower may pay half what a 640-score borrower pays.
3. Loan type & term — adjustable-rate and longer-term loans carry higher PMI.

Under the Homeowners Protection Act of 1998, your lender must automatically cancel PMI when your loan balance reaches 78% of the original home value — based on the original amortization schedule. You can also request PMI removal earlier (at 80% LTV) with a current appraisal. (Source: CFPB — When can I remove PMI?)

Conventional vs FHA — When Each Wins

Use our conventional loan calculator side-by-side with the FHA calculator using the same loan amount. As a rule of thumb:

• Credit score 680+ and 5%+ down → Conventional usually wins. PMI is cheaper than MIP and cancels at 78% LTV.
• Credit score below 680 or 3.5% down → FHA often wins. FHA MIP pricing is more forgiving at lower scores, but watch for life-of-loan MIP.
• Credit score 740+ and 20% down → Conventional wins decisively. No PMI, best rate.

For a full side-by-side breakdown, see our FHA vs Conventional loan guide with worked examples at 640 and 720 credit scores.

Conforming vs Jumbo Conventional Loans

Conventional loans split into two buckets. Conforming loans meet Fannie/Freddie purchase limits ($832,750 baseline, $1,249,125 high-cost ceiling in 2026). Jumbo loans exceed these limits and follow stricter rules: typically 10-20% down, 680+ credit score, and 6-12 months of reserves. Our conventional loan calculator handles both, but for loan amounts above the conforming limit, the jumbo loan calculator shows additional qualification context.

Fannie Mae HomeReady® and Freddie Mac Home Possible® — 3% Down Conventional Loans

Most borrowers believe conventional loans require 5% down. But two special programs — Fannie Mae HomeReady® and Freddie Mac Home Possible® — allow qualified first-time and low-to-moderate-income borrowers to put down just 3% with conventional (not FHA) terms. The key advantages over FHA's 3.5% down: (1) PMI on these programs is cancellable once you reach 80% LTV — FHA MIP typically lasts the life of the loan; (2) interest rates are standard conventional rates, not the higher rates sometimes associated with low-down-payment government programs; and (3) neither program has an upfront funding fee like FHA's 1.75% UFMIP. Key eligibility criteria for both programs:

Both programs underwrite to the same $832,750 conforming limit (2026 baseline), accept non-borrower household income to qualify (e.g., a parent living in the home whose income counts toward the income limit but not toward the mortgage obligation), and allow gifts and grants for the full down payment. If you are a first-time buyer earning under 80% of your area's median income, compare a 3% down HomeReady/Home Possible loan against an FHA 3.5% down loan — the conventional route often saves $20,000+ over 10 years because PMI cancels while MIP does not. Use our conventional loan calculator above with 3% down to model the conventional payment; then run the same scenario on the FHA calculator to compare total cost.

Loan-Level Price Adjustments (LLPAs): The Hidden Pricing Table Behind Conventional Rates

Conventional loan interest rates are not one-size-fits-all. Fannie Mae and Freddie Mac apply Loan-Level Price Adjustments (LLPAs) — risk-based fees that increase the cost (in percentage points) based on your credit score, loan-to-value ratio, and loan purpose. These LLPAs are embedded in the rate the lender quotes you. Understanding them helps you negotiate and compare quotes:

Note: Table shows representative purchase LLPA tiers from the 2026 Fannie Mae LLPA matrix. Second homes, cash-out refinances, and investment properties carry additional surcharges of 0.50%–4.125%. The "—" cells indicate that Fannie Mae does not purchase loans with those credit-score/LTV combinations — meaning a conventional loan is unavailable at those tiers and you would need FHA instead. Each 1.00% in LLPA is equivalent to paying 1 discount point (1% of the loan amount). On a $400,000 loan, a 1.00% LLPA adds $4,000 in cost — typically paid as a slightly higher interest rate (roughly 0.25% higher per point) rather than cash at closing. (Source: Fannie Mae LLPA Matrix.)

Lender-Paid PMI vs Borrower-Paid PMI: Which Costs Less?

Conventional buyers with less than 20% down have two paths: borrower-paid mortgage insurance (BPMI), the standard option where you pay PMI monthly until cancellation; and lender-paid mortgage insurance (LPMI), where the lender pays the PMI premium upfront in exchange for a slightly higher interest rate (typically 0.25%–0.50% higher). BPMI is cancellable and the monthly premium drops off at 78% LTV. LPMI is permanent — the higher rate stays for the life of the loan. On a $300,000 loan with 5% down, BPMI of ~$105/month cancels after roughly 11 years — total PMI cost ~$13,800. LPMI at 0.375% higher rate costs roughly $25,000 in extra interest over 30 years. BPMI wins if you plan to stay past the PMI cancellation point (7–12 years depending on LTV). LPMI wins if you plan to sell or refinance within 5–7 years. The conventional loan calculator above uses BPMI. To model LPMI in the conventional loan calculator, add 0.25%–0.50% to the interest rate and set down payment to 0% (which the conventional loan calculator will interpret as "already paid PMI"). For a precise LPMI quote, ask your loan officer to run both scenarios.

High-Balance Conforming Loans: The "Almost Jumbo" Sweet Spot

Between the $832,750 baseline conforming limit and the $1,249,125 high-cost ceiling sits a category called high-balance conforming loans (also known as "conforming jumbos" or "super-conforming"). These loans are still conventional — Fannie Mae and Freddie Mac purchase them — but they carry additional LLPAs (typically 0.25%–0.75% above the standard matrix) and slightly higher minimum requirements (typically 680+ credit score and 10%+ down). If you are buying in a high-cost county (San Francisco, Los Angeles, New York City, Boston, DC metro, Seattle, etc.), check whether your loan falls into the high-balance range: at $900,000, you are above baseline but below the ceiling, so you qualify as high-balance conforming rather than jumbo — saving 0.25%–0.75% in rate while keeping conventional guidelines. At $1,300,000, you are firmly in jumbo territory with different rules entirely. Use the jumbo loan calculator to compare if your loan exceeds the conforming ceiling. The conventional loan calculator on this page models conforming and high-balance scenarios.

How This Calculator Works

Last updated: June 29, 2026

Like all our calculators, the conventional mortgage calculator uses the standard amortization formula — no proprietary math. Here is exactly what it computes:

Three-step calculation

1. Compute monthly P&I. Using the standard amortization formula on the loan principal:

   M = P × [ r(1 + r)n ] / [ (1 + r)n − 1 ]

   For $400,000 at 6.5% for 360 months: M ≈ $2,528.27.
2. Find the PMI rate from the down payment tier and credit score. For 10% down with a 720 FICO, the industry-average annual rate is roughly 0.37%. Monthly PMI = $400,000 × 0.0037 ÷ 12 ≈ $123.33.
3. Track balance month-by-month to find the PMI cancel month. When the running balance / original home value drops below 78%, PMI auto-cancels starting the next month. With 10% down and no extra payments, that lands around month 110-130 depending on rate.

Verify it in a spreadsheet

Open Excel, Google Sheets, or Apple Numbers to verify the conventional loan calculator output:

=PMT(0.065/12, 360, -400000)

Result: $2,528.27 — matches the "P&I Only" field in the calculator above. (Source: amortization formula matches the CFPB Loan Estimate tool math.)

Assumptions & limitations

• PMI rate table is an industry average derived from public rate sheets (MGIC, Radian, Essent, Arch). Your lender's actual quote may differ by 10-30%.
• PMI cancels based on the 78% LTV auto-termination rule, computed on the original home value. The 80% borrower-requested path is not modeled because it requires a new appraisal.
• Property taxes and homeowners insurance are NOT included. Real PITI will be $300-$700 higher in most U.S. markets.
• Interest rate does not include discount points or origination fees. Use the APR your lender quotes on the Loan Estimate for a true cost comparison.
• Loans above the conforming limit ($832,750 in 2026) are jumbo loans and follow different PMI/reserve rules.

Sources & Editorial Standards

This conventional loan calculator is maintained by the LoanCalculatorPro engineering team. PMI rate tiers in this conventional loan calculator reflect industry averages as of 2026 and are updated periodically. Enter your loan details into the conventional loan calculator above to see personalized PMI estimates.

• CFPB — What is private mortgage insurance?
• CFPB — When can I remove PMI from my loan?
• Fannie Mae — Conventional loan guidelines
• Freddie Mac — Loan requirements
• Federal Housing Finance Agency — Conforming loan limits

Found an error? Email admin@loancalculatorpro.online with the inputs you used and the expected output. We treat calculation bugs as the highest priority. See our editorial standards.