About the FHA Loan Calculator
An FHA loan calculator estimates the monthly payment on a Federal Housing Administration mortgage, including the upfront and annual mortgage insurance premiums (UFMIP and MIP) that are required on every FHA loan. FHA loans are designed for borrowers with smaller down payments or lower credit scores than conventional loans accept — but the lifetime mortgage insurance is a cost that often goes underestimated.
Who FHA loans are designed for
FHA loans, insured by the Federal Housing Administration (a HUD agency), allow down payments as low as 3.5% with a credit score of 580+, or 10% down with a 500–579 score. They have more flexible debt-to-income limits than conventional loans and accept compensating factors that conventional underwriting often won't.
The trade-off is mortgage insurance. Every FHA loan carries an upfront mortgage insurance premium (UFMIP, currently 1.75% of the loan amount, typically rolled into the financed balance) plus an annual MIP (typically 0.55% of the loan balance for most 30-year loans, paid monthly). On a $300,000 loan, that's $5,250 upfront plus $137/month — and on most current FHA loans, the MIP lasts the life of the loan, not just until you reach 80% LTV.
FHA vs. conventional with low down payments
For a borrower with a strong credit score (740+) putting down 5–10%, a conventional loan with PMI usually costs less than an FHA loan with MIP — and PMI on conventional loans cancels at 80% LTV by request, or 78% automatically. The FHA's lifetime MIP can mean tens of thousands more interest-equivalent over the life of the loan.
For borrowers with credit scores in the 580–680 range, FHA is often the cheapest option (or the only option) despite the lifetime MIP, because conventional pricing penalizes lower scores heavily through loan-level price adjustments. As scores rise, the breakeven shifts back toward conventional.
Refinancing out of an FHA loan
Because lifetime MIP is now standard on most FHA originations, many borrowers refinance out of FHA into a conventional loan once they have 20% equity (through appreciation or paydown). Removing MIP can save $100–$300/month on a typical loan — often well worth the closing costs of a refinance, especially if rates haven't moved much since origination.
FHA also offers a Streamline Refinance: an FHA-to-FHA refinance with reduced documentation, no appraisal in some cases, and lower closing costs. Useful if you're staying in FHA and just want a lower rate, but it doesn't get you out of MIP.
FHA loan limits and property requirements
FHA imposes county-level loan limits, set as a percentage of the conforming loan limit. In low-cost counties the FHA limit is much lower than the conventional conforming limit; in high-cost counties they converge. If you're shopping near or above the FHA limit in your county, you may be effectively forced into a conventional loan.
FHA also has property condition requirements: peeling paint on pre-1978 homes, structural defects, missing handrails, and certain other issues can force repairs before closing. This is not a problem on most homes, but can derail a fixer-upper purchase if the appraiser flags many minor items.
Formula
- M = Total monthly payment
- P = Loan amount (price − down payment)
- UFMIP = Upfront mortgage insurance premium (typically 1.75% of P, financed into the loan)
- MIP = Monthly mortgage insurance (typically annual rate × balance / 12)
- r = Monthly interest rate
- n = Number of monthly payments
Worked examples
$300,000 home, 3.5% down, 6.75% rate, 30-year FHA
Down payment $10,500, base loan $289,500. UFMIP at 1.75% = $5,066 financed → loan ~$294,566. Monthly P&I ≈ $1,910. Annual MIP at 0.55% = $1,621/year ≈ $135/month. Total P&I + MIP ≈ $2,045 (before taxes and insurance).
Same home, 5% down conventional with PMI (740 credit)
Down $15,000, loan $285,000 at 6.75%. Monthly P&I ≈ $1,848. PMI at ~0.5% = $1,425/year ≈ $119/month. Total ≈ $1,967. Lower monthly than FHA — and PMI cancels at 80% LTV (4–6 years typically), while FHA MIP runs the life of the loan.
Lifetime MIP cost
FHA loan with $135/month MIP for the full 30-year term: $48,600 in MIP alone, never recoverable. Refinancing to conventional once 20% equity is reached can save $20,000–$35,000 of that depending on timing.
Frequently asked questions
What's the minimum credit score for an FHA loan?
FHA's official minimums are 580 for 3.5%-down loans and 500–579 for 10%-down loans. Individual lenders typically overlay higher minimums (often 620+) to manage their own risk. Below 620, shop several FHA-approved lenders — pricing and minimums vary widely.
What's the difference between FHA MIP and conventional PMI?
Both protect the lender against borrower default. PMI on conventional loans cancels at 80% LTV. FHA MIP on most loans originated since 2013 lasts the life of the loan unless you put 10%+ down (in which case it cancels after 11 years). Many FHA borrowers refinance into conventional once they have 20% equity to escape lifetime MIP.
Can I use FHA for an investment property?
No — FHA loans are for owner-occupied primary residences. You can buy a 1–4 unit property with FHA financing if you live in one of the units; this is one of the most common ways first-time investors enter real estate ("house hacking").
How much can I borrow with FHA?
FHA sets county-level loan limits as a percentage of the conforming loan limit. The exact limits change annually and vary by area. Look up the current limit for your specific county before shopping; in high-cost areas, FHA and conforming limits often match, while low-cost counties have substantially lower FHA limits.
Is FHA worth it if I have a good credit score?
Often not. Conventional loans for borrowers with 740+ scores typically price more competitively and don't require lifetime mortgage insurance. FHA's strongest case is for borrowers with credit in the 580–680 range, very small down payments, or higher debt-to-income ratios that conventional underwriting won't accept.
Can the seller pay my FHA closing costs?
Yes — FHA allows seller concessions of up to 6% of the home price toward closing costs, including the upfront MIP. In a buyer's market this can substantially reduce out-of-pocket costs at closing. In a competitive market, asking for seller concessions can weaken your offer.