The FHA Loan Calculator estimates the monthly payment of an FHA mortgage, including upfront and annual mortgage insurance premiums (MIP), taxes, insurance and other costs.
Monthly payment: $4,623.20
| Monthly payment (principal & interest) | $3,273.19 |
| Monthly FHA MIP | $225.02 |
| Taxes, insurance, HOA and other costs | $1,125.00 |
| Total monthly payment | $4,623.20 |
| Loan amount | $490,943.75 |
| Down payment | $17,500.00 |
| Upfront MIP (financed) | $8,443.75 |
| Total annual MIP paid | $53,848.76 |
| Total of 360 mortgage payments | $1,178,347.68 |
| Total interest | $687,403.93 |
FHA loans are mortgages insured by the U.S. Federal Housing Administration. Because the government protects the lender, borrowers can qualify with lower credit scores (580+ for 3.5% down) and smaller down payments than many conventional loans. They are popular with first-time buyers.
FHA loans charge two premiums. The upfront MIP, 1.75% of the base loan, is usually added to the loan. The annual MIP, currently 0.55% for most 30-year loans, is paid monthly. With less than 10% down it lasts for the life of the loan; with 10% or more it ends after 11 years.
Worked example (defaults): a $500,000 home with 3.5% down. The base loan of $482,500 plus $8,444 upfront MIP is about $490,944, giving a principal and interest payment around $3,275 plus roughly $225 of monthly MIP in the first year, before taxes and insurance.
FHA sets maximum loan amounts by county. The home must be your primary residence and pass an FHA appraisal. Debt-to-income ratios up to about 43% (sometimes higher) are allowed.
Borrowers with good credit and 5%+ down may find conventional loans cheaper, since private mortgage insurance can be cancelled at 20% equity. FHA wins for lower scores or tight budgets. Many FHA borrowers later refinance to conventional to drop MIP.
Can I get rid of FHA MIP? With under 10% down, only by refinancing.
Can FHA be used for investment property? No, only owner-occupied homes of up to four units.
Are closing costs higher? They are similar, and sellers may pay up to 6% for you.