Using the FHA Loan Calculator
The FHA loan calculator is a specialized tool designed to help homebuyers estimate their monthly mortgage payments when using a loan insured by the Federal Housing Administration. FHA loans are popular among first-time homebuyers because they allow for down payments as low as 3.5% and have more flexible credit requirements than conventional loans.
To get an accurate estimate, you will need to enter specific details about your home purchase and loan terms. The calculator factors in unique FHA costs like Mortgage Insurance Premiums (MIP) that conventional calculators might miss.
- Home Price
- The total purchase price of the property you wish to buy.
- Down Payment (%)
- FHA requires a minimum of 3.5% down for credit scores of 580 or higher. If your score is between 500-579, you may need 10% down.
- Interest Rate
- The annual interest rate for your mortgage. FHA rates are often slightly lower than conventional rates, but insurance costs are higher.
- Upfront MIP
- FHA loans require a 1.75% upfront fee. Most borrowers choose to "roll" this into the loan amount rather than paying it in cash at closing.
How the FHA Loan Calculation Works
Calculating an FHA payment involves more steps than a standard mortgage. The formula for the monthly principal and interest remains the same, but we must first determine the "Total Loan Amount" by adding the Upfront Mortgage Insurance Premium (UFMIP).
Monthly P&I = [L * r * (1 + r)^n] / [(1 + r)^n – 1]
- L: Total Loan Amount (Base Loan + 1.75% UFMIP)
- r: Monthly Interest Rate (Annual rate divided by 12)
- n: Total number of monthly payments (360 for a 30-year loan)
- Monthly MIP: (Base Loan * MIP Rate) / 12
FHA Calculation Example
Scenario: You are buying a $250,000 home with the minimum 3.5% down payment on a 30-year fixed term at 6.0% interest.
Step-by-Step Calculation:
- Down Payment: $250,000 * 0.035 = $8,750
- Base Loan: $250,000 – $8,750 = $241,250
- Upfront MIP (1.75%): $241,250 * 0.0175 = $4,221.88
- Total Loan Amount: $241,250 + $4,221.88 = $245,471.88
- Monthly P&I: Based on $245,471.88 at 6% = $1,471.73
- Monthly MIP (0.55%): ($241,250 * 0.0055) / 12 = $110.57
- Total Monthly Base Payment: $1,471.73 + $110.57 = $1,582.30 (plus taxes/insurance)
Common FHA Loan Questions
What is the minimum credit score for an FHA loan?
To qualify for the 3.5% down payment, you generally need a credit score of 580 or higher. Borrowers with scores between 500 and 579 can still qualify but are typically required to provide a 10% down payment.
Does FHA mortgage insurance ever go away?
For most borrowers putting down 3.5%, the annual MIP stays for the entire life of the loan. If you put down 10% or more at the start, the MIP can be removed after 11 years. Otherwise, the only way to remove FHA mortgage insurance is to refinance into a conventional loan once you reach 20% equity.
What are the FHA loan limits?
FHA loan limits vary by county and are updated annually. In "low-cost" areas, the limit is lower, while "high-cost" areas like New York City or San Francisco have much higher limits to accommodate local real estate prices.