Conventional vs FHA in Wisconsin 2025: Total Cost Breakdown

Conventional vs. FHA in Wisconsin — Total Cost Breakdown (2025)

Conventional vs FHA in Wisconsin is one of the most common comparisons buyers make in 2025. Both loans help Wisconsin buyers achieve homeownership, but the total costs can vary dramatically depending on credit score, down payment, and how long you keep the loan. Knowing the differences upfront helps Milwaukee and Waukesha buyers choose the right path.

Let's break it down so you know which loan makes sense for you in Milwaukee, Waukesha, and across Wisconsin.

Credit Score Requirements

FHA: Minimum credit score of 580 (with 3.5% down).
Conventional: Minimum score of 620, but stronger scores (700+) get the best rates and lower PMI.

👉 Translation: FHA offers easier entry, but conventional loans reward better credit with long-term savings.

Down Payment Rules

FHA: 3.5% down with 580+ credit.
Conventional: As little as 3% down for qualified buyers, 5% is common, 20% avoids PMI.

Both options are low-down-payment friendly, but the PMI/MIP treatment is where the real difference shows.

Mortgage Insurance: PMI vs. MIP

FHA MIP: Mandatory, upfront cost + monthly premium. Lasts for the life of the loan if you start below 10% down.
Conventional PMI: Monthly premium if you put less than 20% down, but it drops off once you reach 80% equity.

This is the biggest cost separator. FHA locks you into MIP forever. Conventional lets you remove PMI, lowering your monthly payment over time.

Loan Limits in 2025

FHA: Varies by county (Milwaukee & Waukesha FHA limit is $498,257 for 1-unit homes in 2025).
Conventional: $806,500 statewide for 1-unit homes.

If you're buying a higher-priced home, conventional loans offer much more headroom before you hit jumbo.

Example Payment Scenario - $300,000 Purchase in Milwaukee

FHA Loan (3.5% down, 6.75% rate, MIP included)

Loan amount: $289,500
Monthly principal & interest: $1,878
Monthly MIP: ~$204
Total monthly: ~$2,082

Conventional Loan (5% down, 6.75% rate, PMI included)

Loan amount: $285,000
Monthly principal & interest: $1,849
Monthly PMI: ~$120 (drops off later)
Total monthly: ~$1,969

👉 Over time, the conventional loan saves more, especially once PMI drops off.

Which Loan Should Wisconsin Buyers Choose?

Go FHA if: Your credit is below 620, or you need the most flexible approval terms.
Go Conventional if: You have at least fair credit (620+), plan to stay long-term, and want lower lifetime costs.

Key Takeaways

FHA: Easier to qualify, but MIP lasts forever.
Conventional: Slightly tougher upfront, but cheaper long term.
Loan limits: Conventional gives more room for higher home prices in Wisconsin.
Most buyers with 620+ credit and steady income benefit more from conventional.

Contact Adam Zeman - Wisconsin Mortgage Expert

Phone: 414-975-2654
Email: azeman@uhm.com
Website: www.mkemortgage.com
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Your 24/7 Assistant: Wisconsin Real Estate Mortgage Expert

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