FHA Loan Calculator

About the FHA Loan Calculator

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration, designed to help first-time and lower-income homebuyers qualify for financing with a down payment as low as 3.5%. In exchange for the lower barrier to entry, FHA borrowers pay mortgage insurance premiums — both an upfront premium (UFMIP) financed into the loan and an annual premium (MIP) added to monthly payments.

This calculator computes your full FHA loan payment including principal, interest, and the monthly MIP charge. It also shows the upfront MIP cost, the total insurance premium you will pay over the life of the loan, and how the FHA option compares to a conventional mortgage with PMI.

FHA loans remain one of the most accessible paths to homeownership, particularly for borrowers with credit scores between 580 and 700 or limited savings for a down payment. Understanding the true cost — including insurance — is essential for making an informed decision.

When This Page Helps

FHA loans make homeownership possible for millions of buyers who cannot meet conventional down payment requirements. However, the mortgage insurance premiums add significant cost. This calculator reveals the total MIP expense so you can weigh the FHA option against saving for a larger down payment on a conventional loan.

The upfront MIP alone is 1.75% of the loan amount — on a $300,000 loan, that is $5,250 rolled into your balance. Combined with annual MIP of 0.55% for most borrowers, this insurance can total $40,000-$60,000 over the life of the loan.

How to Use the Inputs

1. Enter the home purchase price.
2. Enter your down payment percentage (minimum 3.5% for FHA).
3. Enter the annual interest rate.
4. Select the loan term (15 or 30 years).
5. The calculator automatically applies the 1.75% upfront MIP and the annual MIP rate.
6. Review your total monthly payment, total MIP costs, and comparison to a conventional loan.

Example Calculation

Tips & Best Practices

• FHA requires a minimum 3.5% down payment with a credit score of 580+; 10% down with scores 500-579.
• The upfront MIP (1.75%) is almost always financed into the loan — you do not need cash for it.
• For newer FHA loans with less than 10% down, MIP usually lasts the entire loan term.
• With 10% or more down, annual MIP drops off after 11 years.
• Compare FHA total cost (with MIP) against conventional with PMI — PMI cancels at 80% LTV.
• FHA allows seller contributions up to 6% of the sale price for closing costs.

Understanding FHA Mortgage Insurance Premiums

FHA MIP comes in two forms. The upfront mortgage insurance premium (UFMIP) is 1.75% of the base loan amount, charged at closing but almost always financed into the loan. The annual mortgage insurance premium (MIP) ranges from 0.15% to 0.75% depending on the loan term, LTV ratio, and loan amount. For the most common scenario — a 30-year loan with less than 5% down — the annual rate is 0.55%.

FHA Loan Requirements

Beyond the down payment and credit score minimums, FHA loans require the property to meet HUD minimum property standards (an FHA appraisal is more thorough than conventional), a debt-to-income ratio generally below 43% (though exceptions exist up to 50% with compensating factors), and proof of steady income. The home must be your primary residence.

When FHA Makes Financial Sense

FHA loans are most advantageous when your credit score is below 700 or you have limited savings. If your score is 740+ and you have 10% down, a conventional loan with PMI that cancels at 80% LTV is usually cheaper over the long run. The break-even point depends on how quickly you build equity and whether you plan to refinance.

Frequently Asked Questions

• What is FHA mortgage insurance?

  FHA mortgage insurance (MIP) is required on all FHA loans. It consists of an upfront premium of 1.75% of the loan amount (usually financed) and an annual premium of 0.15-0.75% (paid monthly). This insurance protects the lender if you default, enabling them to offer loans with lower down payments.

• How long do I have to pay FHA MIP?

  For loans with less than 10% down (the most common scenario), MIP lasts for the entire life of the loan. For loans with 10% or more down, MIP drops off after 11 years. The only way to remove MIP earlier is to refinance into a conventional loan once you have 20% equity.

• What credit score do I need for an FHA loan?

  The minimum is 500 with a 10% down payment, or 580 with a 3.5% down payment. However, many FHA lenders set their own minimums higher — typically 620-640. Higher scores also qualify you for better interest rates.

• FHA vs conventional — which is cheaper?

  For borrowers with good credit (720+) and 5-10% down, conventional with PMI is often cheaper because PMI cancels at 80% LTV while FHA MIP may last the full term. For borrowers with lower credit or minimal savings, FHA may be the only option and can still be cost-effective.

• Can I use an FHA loan for a second home or investment property?

  No. FHA loans are restricted to primary residences. You must live in the home as your principal residence for at least the first year. Using an FHA loan for a non-owner-occupied property is mortgage fraud.

• What are FHA loan limits?

  FHA loan limits vary by county and are updated annually. Check the HUD website for the exact limit in your specific county.

• Does the upfront MIP increase my loan amount?

  Yes. The 1.75% upfront MIP is typically financed into the loan, increasing your total balance. On a $337,750 base loan, this adds $5,911 to your financed amount, which means you pay interest on the MIP as well.

• Can I refinance out of an FHA loan?

  Yes. Once you build 20% equity, you can refinance into a conventional loan to eliminate mortgage insurance entirely. FHA also offers streamline refinancing (FHA-to-FHA) with reduced documentation, which can lower your rate but keeps MIP.