FHA Loan Calculator
FHA Loan Calculator
Calculate FHA loan payments including mortgage insurance premiums
Total purchase price of the home
Amount paid upfront (3.50% of home price)
Credit score affects down payment requirements and interest rates
Annual percentage rate (APR) for the mortgage
Length of the mortgage loan
Annual property taxes (typically 1-1.5% of home value)
Annual homeowners insurance premium
FHA Loan Calculator: Complete Guide
An FHA loan is a government-backed mortgage insured by the Federal Housing Administration with lower down payment requirements and flexible credit standards.FHA loans require mortgage insurance premiums (MIP) including an upfront payment and annual premiums, but offer competitive rates and accessibility for first-time homebuyers and those with lower credit scores.
Quick Answer
FHA loans require as little as 3.5% down payment with 580+ credit score. Includes upfront mortgage insurance (1.75% of loan) and annual MIP (0.80-0.85% depending on loan terms). Lower credit scores (500-579) require 10% down payment.
FHA Loan Features
Minimum down payment requirement with 580+ credit score
Key Benefits:
Low Down Payment
Only 3.5% down payment required with credit score of 580 or higher. 10% down payment required for credit scores between 500-579. Significantly lower than conventional loans.
Flexible Credit Requirements
Accepts borrowers with credit scores as low as 500 (with 10% down) or 580 (with 3.5% down). More lenient than conventional loans which typically require 620+ credit scores.
Government Backing
Insured by the Federal Housing Administration, reducing lender risk and enabling more accessible lending standards for qualified borrowers.
Mortgage Insurance Premium (MIP)
Upfront Mortgage Insurance Premium (UFMIP)
One-time fee equal to 1.75% of the loan amount, typically rolled into the loan.
UFMIP = Loan Amount × 1.75%
Example: $289,500 loan × 1.75% = $5,066Annual Mortgage Insurance Premium (MIP)
Annual premium based on loan amount, loan-to-value ratio, and loan term.
Annual MIP rates:
≤ 90% LTV: 0.80% (30-year), 0.45% (15-year)
90.01-95% LTV: 0.85% (30-year), 0.70% (15-year)
> 95% LTV: 0.85% (30-year), 0.70% (15-year)FHA Loan Eligibility Requirements
Credit & Income
Credit Score Requirements
580+ for 3.5% down payment, 500-579 for 10% down payment, must have 2+ years credit history
Debt-to-Income Ratio
Maximum 43% total DTI, up to 57% with compensating factors like larger down payment
Employment History
Stable employment for 2+ years, consistent income, employment gaps explained
Property & Financial
Primary Residence
Must be primary residence, no investment properties, occupancy within 60 days
FHA Loan Limits
Varies by county: $472,030 standard limit, up to $1,089,300 in high-cost areas
Property Standards
Must meet FHA property standards, pass FHA appraisal, safe and livable condition
Example FHA Loan Calculations
Example 1: First-Time Buyer
$250,000 home, 3.5% down, 650 credit score, 6.5% interest rate, 30-year term
Answer: $8,750 down, $1,723/month base payment
Example 2: Lower Credit Score
$200,000 home, 550 credit score (10% down required), 7.0% interest rate
Answer: $20,000 down, $1,350/month base payment
Example 3: High-Cost Area
$500,000 home in high-cost county, 3.5% down, 720 credit score, 6.25% rate
Answer: $17,500 down, $3,363/month base payment
FHA vs Conventional Loans
When to Choose FHA
When Conventional May Be Better
MIP Removal Rules
- • Loans originated after June 2013: MIP for life of loan if LTV > 90%
- • Loans with ≤ 90% LTV: MIP removable after 11 years
- • Refinancing to conventional loan removes MIP requirement
- • Consider total cost including MIP when comparing loan types
FHA Loan Application Process
Pre-Application Steps
Check Credit Score
Obtain credit reports, dispute errors, pay down balances to improve score
Calculate DTI Ratio
Total monthly debts ÷ gross monthly income, aim for under 43%
Save for Down Payment
Minimum 3.5% plus closing costs (2-5% of purchase price)
Application Requirements
Income Documentation
2 years tax returns, pay stubs, W-2s, bank statements
Asset Verification
Bank statements, investment accounts, gift letter if applicable
Property Information
Purchase contract, FHA appraisal, property insurance quote
Frequently Asked Questions
What is the minimum down payment for an FHA loan?
3.5% down payment with a credit score of 580 or higher. If your credit score is between 500-579, you'll need a 10% down payment. The down payment can come from savings, gifts from family members, or approved down payment assistance programs.
How is FHA mortgage insurance different from PMI?
FHA requires both upfront and annual mortgage insurance. The upfront premium (1.75% of loan amount) is typically financed into the loan. Annual MIP cannot be removed on most loans originated after 2013, unlike conventional PMI which can be cancelled when you reach 20% equity.
What are FHA loan limits?
FHA loan limits vary by county. Currently, the baseline limit is $472,030 for most areas, with high-cost areas up to $1,089,300. You can check specific limits for your county on the HUD website. The loan amount cannot exceed these limits.
Can I use an FHA loan for investment property?
No, FHA loans are only for primary residences. You must move into the home within 60 days of closing and live there for at least one year. Investment properties and vacation homes are not eligible for FHA financing. Consider conventional investment property loans instead.
How long does FHA loan approval take?
FHA loan processing typically takes 30-45 days from application to closing. This includes time for income verification, credit review, FHA appraisal, and underwriting. Pre-approval can be obtained in 1-3 days to strengthen your offer when house hunting.
Can I refinance an FHA loan to remove mortgage insurance?
Yes, you can refinance to a conventional loan to remove mortgage insurance if you have 20% equity and qualify for conventional lending. FHA also offers streamline refinancing to reduce interest rates, but this keeps the MIP requirement. Consider refinancing costs versus MIP savings.
What credit score do I need for the best FHA rates?
While FHA accepts scores as low as 500-580, scores of 640+ typically qualify for the best interest rates. Scores between 580-639 may face higher rates or additional requirements. Work on improving your credit score before applying to secure better terms and lower monthly payments.
Advanced FHA Loan Considerations
FHA Streamline Refinance
Simplified refinancing for existing FHA borrowers to reduce interest rates:
Ideal when rates drop significantly but you want to keep FHA loan benefits.
203(k) Rehabilitation Loans
FHA loans that include funds for home improvements and repairs:
Allows purchase and renovation with a single loan, based on after-repair value.
Gift Funds and Down Payment Assistance
FHA allows various sources for down payment and closing costs:
Significantly reduces cash needed at closing for qualified borrowers.
FHA Loan Market Insights
Current Market Trends
- Rising Usage: 15-20% of home purchases use FHA loans
- First-time Buyers: 80%+ of FHA borrowers are first-time buyers
- Geographic Concentration: Popular in affordable housing markets
- Credit Scores: Average FHA borrower score ~650
Planning Considerations
- Budget for lifetime MIP in payment calculations
- Consider refinancing strategy for MIP removal
- Compare total cost to conventional financing
- Factor property condition requirements into search
Related Mortgage Tools
FHA Loan Calculator
Calculate FHA loan payments including mortgage insurance premiums
Total purchase price of the home
Amount paid upfront (3.50% of home price)
Credit score affects down payment requirements and interest rates
Annual percentage rate (APR) for the mortgage
Length of the mortgage loan
Annual property taxes (typically 1-1.5% of home value)
Annual homeowners insurance premium