The formula
How it works
Estimate the monthly payment on an FHA home loan, including the mortgage insurance the FHA requires. FHA loans allow a low down payment — as little as 3.5% — but that insurance adds to every payment.
FAQ
Why do FHA loans have mortgage insurance?
Because they allow small down payments, FHA loans are riskier for lenders, so the FHA charges mortgage insurance to protect them. There is an upfront premium, usually rolled into the loan, plus an annual premium paid monthly.
How small can the down payment be?
FHA loans allow as little as 3.5% down for borrowers with a qualifying credit score, which is why they are popular with first-time buyers who have not saved a large deposit.
Can I ever remove FHA mortgage insurance?
If your down payment was under 10%, the annual MIP stays for the life of the loan and the usual way to drop it is to refinance into a conventional mortgage once you have enough equity. Putting down 10% or more limits MIP to 11 years instead.
What credit score do I need for an FHA loan?
A score of 580 or above typically qualifies for the minimum 3.5% down payment, while scores between 500 and 579 usually require at least 10% down. Requirements can vary by lender on top of the FHA’s minimums.
Is the upfront MIP paid in cash?
Most borrowers roll the upfront mortgage insurance premium into the loan amount rather than paying it at closing, which is how this calculator treats it. That keeps closing costs lower but means you pay interest on the premium over the life of the loan.
How does an FHA loan compare to a conventional loan?
FHA loans have looser credit requirements and a lower minimum down payment, but the mandatory mortgage insurance often makes the monthly payment higher than a conventional loan once you qualify for one. Borrowers with strong credit and a bigger deposit usually save money going conventional.
Is there a limit on how much I can borrow with an FHA loan?
Yes, FHA loans are capped by county-specific loan limits set each year, which are lower in most areas than conventional conforming loan limits. Check the current limit for your county before assuming an FHA loan can cover a given home price.
About the FHA loan calculator
This calculator estimates the monthly payment on an FHA loan — a government-backed mortgage popular with first-time buyers because it allows a down payment as low as 3.5%. The trade-off for that low deposit is mortgage insurance: an upfront premium and an ongoing annual one. This tool folds both into the payment so you can see the true monthly cost of an FHA loan, not just the principal and interest.
How to use it
Enter the home price, your down payment percentage, the interest rate and the loan term. The calculator adds the FHA’s upfront mortgage insurance premium to the loan, then works out the principal-and-interest payment and the monthly mortgage insurance, showing the total monthly cost. For example, a $300,000 home with 3.5% down at 6.5% over 30 years has a payment of roughly $1,900 once the insurance is included.
The formula
The base loan is the price minus the down payment, plus the upfront mortgage insurance premium (1.75% of the base) financed into the loan. The principal-and-interest payment comes from the amortization formula, . The monthly mortgage insurance is the annual MIP rate (about 0.55%) times the loan, divided by 12, and the total payment is the two added together.
Where it is used
First-time and lower-deposit buyers use it to see whether an FHA loan fits their budget, since the mortgage insurance makes the payment higher than a conventional loan at the same price. Lenders and mortgage brokers calculate the same figures when quoting FHA loans. Comparing the FHA payment with a conventional one helps buyers decide which route makes more sense for their down payment and credit.