How this FHA loan calculator works
An FHA loan is a mortgage insured by the Federal Housing Administration. It allows a smaller down payment and a lower credit score than most conventional loans, in exchange for mortgage insurance. Enter the home price, down payment, rate and term to see the full monthly payment including that insurance.
FHA mortgage insurance (MIP)
FHA loans carry two insurance charges:
- Upfront MIP: 1.75% of the loan amount, usually added to the loan.
- Annual MIP: a yearly percentage of the loan, paid monthly. For most 30-year loans with less than 5% down it is 0.55%.
HUD changes these rates from time to time, so confirm the current figures with your lender.
Worked example
On a $300,000 home with 3.5% down, the down payment is $10,500 and the base loan is $289,500. Upfront MIP is about $5,066. Annual MIP at 0.55% adds about $133 a month.
FHA down payment and credit score
The minimum down payment is 3.5% with a credit score of 580 or higher. With a score of 500 to 579, the minimum is 10%. Individual lenders may set higher requirements.
The full payment in the example
When the upfront MIP is added to the loan, the amount you borrow in the example rises from $289,500 to about $294,566. At an example rate of 6.5% over 30 years, principal and interest on that amount are about $1,862 a month. Add the $133 of annual MIP and the payment is about $1,995 before property tax and home insurance.
More examples: three down payments on a $300,000 home
This table uses 30-year loans. Annual MIP is 0.55% with less than 5% down and 0.50% with 5% or more down.
| Down payment | Cash down | Base loan | Upfront MIP | Monthly MIP | How long annual MIP lasts |
|---|---|---|---|---|---|
| 3.5% | $10,500 | $289,500 | $5,066.25 | $132.69 | Life of the loan |
| 5% | $15,000 | $285,000 | $4,987.50 | $118.75 | Life of the loan |
| 10% | $30,000 | $270,000 | $4,725.00 | $112.50 | 11 years |
Moving from 3.5% to 5% down costs $4,500 more cash and lowers the monthly MIP by about $14. Reaching 10% down is the step that puts an end date on the annual MIP.
What changes the result
- Down payment: it lowers the base loan, and both MIP charges are percentages of that loan.
- The 5% and 10% thresholds: 5% down moves the annual MIP rate from 0.55% to 0.50%. 10% down limits annual MIP to 11 years.
- Interest rate and term: these set the principal and interest part of the payment, which is the largest part.
- Property tax and home insurance: both vary widely by location and are added on top.
Common mistakes
- Leaving out the upfront MIP. When it is added to the loan, you pay interest on it for as long as you keep the loan.
- Assuming FHA mortgage insurance drops off at 20% equity the way PMI can on a conventional loan. With less than 10% down it stays for the life of the loan.
- Shopping above the FHA loan limit for your county.
- Comparing FHA and conventional loans on the interest rate alone. Compare the full monthly payment, including mortgage insurance.
Related calculators
Compare the insurance cost on a conventional loan with the PMI calculator. See the cash needed at each percentage with the down payment calculator, and test a later move to a conventional loan with the refinance calculator.
Frequently asked questions
Can FHA mortgage insurance be removed?
If you put down less than 10%, annual MIP lasts for the life of the loan. With 10% or more down it ends after 11 years. Many borrowers refinance into a conventional loan once they have 20% equity.
Is there a limit on FHA loan size?
Yes. FHA loan limits are set by county and change every year. Check the HUD limit for your county.
FHA or conventional: which is cheaper?
FHA often costs less for borrowers with lower credit scores. With strong credit and at least 5% down, a conventional loan with PMI is often cheaper. Compare with the mortgage calculator.
How much is the down payment on a $300,000 FHA loan?
At the 3.5% minimum, $10,500. If your credit score is between 500 and 579, the minimum is 10%, or $30,000. Closing costs are separate.
What is the difference between MIP and PMI?
MIP is the mortgage insurance on FHA loans. It has an upfront charge and an annual charge. PMI is the insurance on conventional loans with less than 20% down, and you can ask to have it removed once the balance reaches 80% of the home’s original value.
Does a bigger down payment lower FHA mortgage insurance?
Yes. A larger down payment means a smaller loan, so both charges fall. At 5% down the annual rate drops from 0.55% to 0.50% on most 30-year loans, and at 10% down the annual MIP ends after 11 years.
Does this FHA loan calculator show my approved amount?
No. It estimates a payment from the numbers you enter. Your lender decides what you qualify for, and current MIP rates should be confirmed with that lender.