Obtaining a mortgage can be a significant step towards homeownership. For many, especially first-time homebuyers or those with less-than-perfect credit, FHA (Federal Housing Administration) loans offer a valuable pathway. This calculator helps you estimate your total monthly housing expense, including not just the standard principal and interest, but also the unique costs associated with FHA loans, such as the Upfront Mortgage Insurance Premium (UFMIP) and the annual Mortgage Insurance Premium (MIP).
What is an FHA Loan?
FHA loans are government-insured mortgages designed to make homeownership more accessible. They typically feature lower down payment requirements and more flexible credit score guidelines compared to conventional loans. However, they come with mortgage insurance premiums that protect the lender in case of default.
Key Components of Your Monthly Payment:
Principal & Interest (P&I): This is the core of your mortgage payment that goes towards paying down the loan balance and the interest charged by the lender. It's calculated based on the loan amount, interest rate, and loan term.
FHA Upfront MIP (UFMIP): This is an upfront insurance premium paid at closing, typically rolled into the loan amount. It's a percentage of the loan value. For calculation purposes in this estimator, we amortize this cost over the life of the loan to show its monthly impact. The current standard UFMIP is 1.75% for most borrowers.
Annual MIP (Monthly): FHA loans also require an annual MIP, which is paid in monthly installments. This premium is based on the loan amount, loan term, and Loan-to-Value (LTV) ratio. The rate can vary, and for loans originated after June 3, 2013, with a 30-year term and an LTV greater than 90%, it's typically 0.55% for the first 11 years. Loans with smaller down payments may have longer MIP terms.
Property Taxes: These are local government taxes based on the assessed value of your property. They are usually paid monthly into an escrow account managed by your lender.
Homeowner's Insurance: This insurance protects against damage to your home. Lenders require it, and the monthly premium is also typically collected through your escrow account.
The Calculation Explained:
The calculator first determines the standard Principal & Interest payment using the following formula:
$M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]$
Where:
n = Total Number of Payments (Loan Term in Years * 12)
Next, it calculates the monthly impact of the FHA Upfront MIP by dividing the UFMIP amount (Loan Amount * Upfront MIP Percentage) by the total number of monthly payments (n).
The Monthly MIP is calculated by taking the Loan Amount multiplied by the Annual MIP percentage, then dividing by 12.
Monthly Property Taxes and Homeowner's Insurance are calculated by dividing the annual amounts by 12.
Finally, all these components are added together to provide the Total Estimated Monthly Payment. The calculator also estimates the total cost of the loan over its term and the total interest paid.
Who Should Use This Calculator?
This calculator is ideal for:
Prospective FHA homebuyers trying to budget their potential monthly expenses.
Individuals comparing FHA loans to conventional mortgages.
Anyone wanting a clearer understanding of all the costs involved in an FHA mortgage.
Disclaimer: This calculator provides an estimate. Actual mortgage payments may vary based on lender fees, specific FHA guidelines, credit score, appraisal, and other factors. It's essential to consult with a mortgage professional for precise figures.
function calculateMortgage() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var fhaUpfrontMIPPercent = parseFloat(document.getElementById("fhaMortgageInsurancePremium").value);
var annualMIPPercent = parseFloat(document.getElementById("annualMortgageInsurance").value);
var propertyTaxesAnnual = parseFloat(document.getElementById("propertyTaxes").value);
var homeInsuranceAnnual = parseFloat(document.getElementById("homeInsurance").value);
var principalInterest = 0;
var totalInterest = 0;
var amortizedUpfrontMIP = 0;
var monthlyMIP = 0;
var monthlyTaxes = 0;
var monthlyInsurance = 0;
var totalMonthlyPayment = 0;
var totalLoanCost = 0;
if (isNaN(loanAmount) || loanAmount <= 0 ||
isNaN(interestRate) || interestRate < 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(fhaUpfrontMIPPercent) || fhaUpfrontMIPPercent < 0 ||
isNaN(annualMIPPercent) || annualMIPPercent < 0 ||
isNaN(propertyTaxesAnnual) || propertyTaxesAnnual < 0 ||
isNaN(homeInsuranceAnnual) || homeInsuranceAnnual 0) {
principalInterest = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
principalInterest = loanAmount / numberOfPayments;
}
// Calculate Upfront MIP amount
var upfrontMIPAmount = loanAmount * (fhaUpfrontMIPPercent / 100);
// Amortize Upfront MIP over the loan term for monthly estimation
amortizedUpfrontMIP = upfrontMIPAmount / numberOfPayments;
// Calculate Monthly MIP
monthlyMIP = (loanAmount * (annualMIPPercent / 100)) / 12;
// Calculate Monthly Taxes and Insurance
monthlyTaxes = propertyTaxesAnnual / 12;
monthlyInsurance = homeInsuranceAnnual / 12;
// Calculate Total Monthly Payment
totalMonthlyPayment = principalInterest + amortizedUpfrontMIP + monthlyMIP + monthlyTaxes + monthlyInsurance;
// Calculate Total Loan Cost and Total Interest Paid
// This estimation of total interest can be complex. A simplified approach:
// Total paid over loan term = Total Monthly Payment * Number of Payments
// Total Interest = Total Paid – Original Loan Amount
// Note: This simplified total interest doesn't separate P&I interest from MIP interest, but gives a good estimate of all interest paid.
// A more precise calculation would involve tracking interest component of P&I separately.
var estimatedTotalPaid = totalMonthlyPayment * numberOfPayments;
totalLoanCost = estimatedTotalPaid; // This includes principal, all interest, and MIPs
// Calculate P&I Interest only for total interest paid.
var totalPIPaid = (principalInterest * numberOfPayments) – loanAmount;
var totalInterestPaid = totalPIPaid + (upfrontMIPAmount) + (monthlyMIP * numberOfPayments); // Includes interest on loan + MIPs
document.getElementById("monthlyPayment").innerText = "$" + principalInterest.toFixed(2);
document.getElementById("amortizedUpfrontMIP").innerText = "$" + amortizedUpfrontMIP.toFixed(2);
document.getElementById("monthlyMIP").innerText = "$" + monthlyMIP.toFixed(2);
document.getElementById("monthlyTaxes").innerText = "$" + monthlyTaxes.toFixed(2);
document.getElementById("monthlyInsurance").innerText = "$" + monthlyInsurance.toFixed(2);
document.getElementById("totalMonthlyPayment").innerText = "$" + totalMonthlyPayment.toFixed(2);
document.getElementById("totalLoanCost").innerText = "$" + totalLoanCost.toFixed(2);
document.getElementById("totalInterestPaid").innerText = "$" + totalInterestPaid.toFixed(2);
}