Using the FHA Loan Calculator to Estimate Monthly Payments
The Mortgage Research Center FHA loan calculator is a quick and easy way to estimate the monthly payments on FHA-backed mortgages. Here is a brief explanation of the different terms you'll need to know to use our FHA home loan calculator.
Home Value
Your home value will be the total purchase price of the property for which you plan to take out an FHA loan. Remember that this is the total amount you intend to pay for the home, not the size of the loan you're applying for.
Down Payment
This is how much money you plan to put down toward your new home. You can enter your down payment in the FHA loan calculator as either a fixed dollar amount or a percentage of your home value.
Most FHA borrowers will be required to put down at least a 3.5% down payment. Qualifying applicants with credit scores between 500 and 579 must put down a minimum of 10%.
Interest Rate
Your interest rate represents the percentage of your loan balance that you’ll pay to your lender each year in exchange for being able to borrow the funds you need. For example, the annual interest cost of a $250,000 loan at a rate of 6% would be $15,000.
As the FHA loan calculator demonstrates, higher interest rates equate to higher monthly payments and lower purchasing power.
Loan Term
The loan term is the length of time over which you will repay your mortgage. Most homebuyers opt for a 30-year loan, but shorter terms are possible. A common alternative FHA loan term is 15 years.
Selecting a shorter loan term can result in paying your home off sooner and spending less on lifetime interest. A longer term will have lower monthly payments and may allow you to purchase a more expensive property.
Loan Type
Here, you can select the type of FHA loan that you need. Rates and costs may vary by mortgage, with the available options including:
- FHA Purchase Loan – This is your standard FHA loan for purchasing residential property. If you need a loan to buy a home, this is the option for you.
- FHA Streamline Refinance – The FHA streamline refinance is for existing FHA loan holders looking to reduce their current rate and payment. If you want to refinance your FHA loan and don’t need to take out extra cash, this is the option for you. See our FHA Refinance Calculator.
- FHA Cash-Out Refinance – An FHA cash-out refinance allows you to refinance your current loan – regardless of whether it’s with the FHA – and withdraw extra funds at closing by tapping into your built-up equity. If you want to refinance your mortgage and need to pull out cash at closing, this is the option for you.
Property Tax Rate
Property taxes are paid to local governments and related agencies and are assessed annually as a percentage of your home’s value. Property tax rates can vary between counties, cities, and even neighborhoods.
Our FHA loan calculator assumes an annual property tax rate of 1.2% of your home's value. However, you can adjust that figure to represent your local property tax costs more accurately.
Homeowner’s Insurance
Homeowner’s insurance is a type of insurance policy that protects your property against damage and loss. Mortgage companies will generally require you to carry a homeowner’s insurance policy for the life of your loan.
The FHA loan calculator assumes an annual homeowner's insurance policy cost equal to 0.35% of your home's value. However, this can be adjusted as actual rates vary significantly by location and insurance provider.
Principal and Interest
Your monthly principal and interest payment is the amount you'll spend each month covering your loan's principal repayment and interest costs. While the way payments get divided between principal and interest will change over time, the total principal and interest payment will remain constant for fixed-rate FHA loans.
Annual MIP
All FHA loans have an annual mortgage insurance premium (MIP) based on the borrower's down payment or equity and the size and term of their loan. For most new FHA borrowers, this equates to an annual MIP rate of 0.55%.
This yearly MIP premium is divided evenly among the twelve monthly payments. The figure displayed on our FHA loan calculator represents the estimated monthly cost. For example, a 0.55% annual MIP on a $200,000 loan would be $1,100, equating to around $92 monthly.
Most new borrowers will pay the FHA annual MIP for the life of their loan. Buyers who put down 10% or refinancing homeowners with at least 10% equity will only be responsible for annual MIP premiums for the first 11 years.
Keep in mind that homeowners with at least 20% equity may be able to refinance their FHA loan into a conventional mortgage and eliminate the need for mortgage insurance altogether.
FHA Annual MIP for Loans Longer Than 15 Years
| Loan Amount | Down Payment/Equity | Annual MIP Rate |
| $726,200 or less | < 5% | 0.55% |
| $726,200 or less | 5% or more | 0.50% |
| > $726,200 | < 5% | 0.75% |
| > $726,200 | 5% or more | 0.70% |
FHA Annual MIP for Loans 15 Years or Fewer
| Loan Amount | Down Payment/Equity | Annual MIP Rate |
| $726,200 or less | < 10% | 0.40% |
| $726,200 or less | 10% or more | 0.15% |
| > $726,200 | < 10% | 0.65% |
| > $726,200 | 10% to 21.9% | 0.40% |
| > $726,200 | 22% or more | 0.15% |
Upfront MIP
FHA loans also have an upfront mortgage insurance premium (UFMIP), a one-time fee that can be paid at closing or financed into the total loan balance. The UFMIP is currently 1.75% on all new FHA-backed mortgages.
| Loan Amount | Upfront Mortgage Insurance Premium |
|---|---|
| $150,000 | $2,625 |
| $200,000 | $3,500 |
| $250,000 | $4,375 |
| $300,000 | $5,250 |
| $350,000 | $6,125 |
| $400,000 | $7,000 |
| $450,000 | $7,875 |
Other FHA Loan Costs to Expect
The Mortgage Research Center FHA loan calculator will show you how much you can plan to pay each month on your FHA-backed mortgage, including for external costs like property taxes and homeowner’s insurance.
However, borrowers should expect to be responsible for other costs besides their down payment and the previously mentioned expenses.
Closing Costs
Closing costs represent the taxes and fees associated with purchasing a home or taking out a new mortgage. For most borrowers, FHA closing costs will run between 3% and 5% of their loan total.
These costs are traditionally due at closing, but you may be able to roll them into your loan balance or have them covered by your mortgage provider through lender credits.
You can also reduce your closing costs through the use of seller concessions and down payment assistance programs.
Appraisal and Inspection
FHA borrowers can expect to pay slightly more for an appraisal as appraisers must ensure that homes meet the agency's minimum property requirements. While costs vary by location, you can plan to spend between $400 and $700 for an FHA appraisal.
If mechanical systems such as the HVAC, roof, or electrical appear to be in disrepair, you may be required to have separation inspections completed at an additional expense.
HOA Dues
Properties within a homeowners' or condo owners' association will likely have associated HOA dues. These fees are typically collected annually, quarterly, or monthly and are usually separate from your monthly mortgage payment.
FHA Loan Rates
Since the federal government insures FHA mortgages, FHA loan rates are typically lower than conventional alternatives for most borrowers without perfect credit. This is because the FHA backing lowers the risk for lenders, who then pass it on through cheaper rates.
FHA Loan Limits
FHA loan limits are set annually by the US Department of Housing and Urban Development (HUD) to remain in line with the increasing cost of homeownership. These loan limits can vary by area and the number of residential units on the property that you're purchasing.
Single-Family FHA Loan Limits
Most buyers will need to abide by the FHA's single-family loan limits. For 2024, the one-unit loan limit for most parts of the United States is $498,257. High-cost areas can have a single-family loan limit of up to $1,149,825, with many locales having caps between this and the standard base limit.
The specially designated exception areas of Alaska, Hawaii, Guam, and the US Virgin Islands have an expanded single-unit loan limit of $1,724,725.
| Location Designation | 2024 FHA Loan Limits |
| Standard | $498,257 |
| High-Cost Area | $1,149,825 |
| Special Exception Area | $1,724,725 |
Multifamily FHA Loan Limits
FHA loan limits are higher for multifamily properties and increase with the number of units in the home and where the property is located.
| # of Units | Standard Loan Limits | High-Cost Loan Limits | Special Exception Loan Limits |
| Two-Unit | $637,950 | $1,472,250 | $2,208,375 |
| Three-Unit | $771,125 | $1,779,525 | $2,669,275 |
| Four-Unit | $958,350 | $2,211,600 | $3,317,400 |
FHA Eligibility Requirements
FHA eligibility requirements are typically easier for applicants to meet than those of comparable conventional loans. In fact, the FHA home loan program was designed to help borrowers who may have trouble obtaining other affordable mortgages.
To qualify for an FHA-backed loan, you will need:
- A credit score of 580+ with most lenders
- A down payment of 3.5%. Borrowers with 10% down may qualify with a 500+ credit score
- A debt-to-income ratio of around 43-50%
- A two-year employment history with steady and stable earnings
- A credit history free from recent foreclosures, bankruptcies, or other major adverse events
- To be purchasing a home that you plan to live in as your primary residence
- To anticipate moving into the home within 60 days of closing
- To want to borrow less than the FHA loan limit for your area
Pros and Cons of an FHA Loan
The Mortgage Research Center FHA home loan calculator can give you a reasonably accurate estimate of how much you'd pay each month for an FHA-backed mortgage. However, there is more to choosing the right type of loan than just looking at the numbers.
FHA Loan Pros
- Low Credit Score Requirement – Applicants can qualify for an FHA loan with a credit score as low as 500, although most lenders will look for 580 or higher. By comparison, conventional mortgages require a minimum credit score of 620.
- Generally Cheaper Mortgage Insurance Costs – Conventional loans require private mortgage insurance (PMI) on all loans with less than 20% equity. PMI is risk-based, meaning borrowers with lower credit scores will pay higher rates. FHA's mortgage insurance premium doesn't increase for homeowners who don’t have excellent credit.
- Higher Debt-to-Income Allowances – FHA lenders can approve applicants with debt-to-income ratios as high as 56.9%, but more commonly 43-50%. Compared to the conventional limit of 43-45% in most cases, FHA borrowers can have more existing debt and still potentially qualify for a larger monthly payment.
FHA Loan Cons
- Lower Loan Limits – FHA loans tend to have lower loan limits than most other common types of mortgages. While the current standard single-family FHA loan limit is $498,257, the standard conventional limit for a single-family home is $766,550.
- Lifetime Mortgage Insurance – Although conventional lenders let you get rid of private mortgage insurance once you reach 20% equity in your home, most FHA borrowers are on the hook for annual MIP payments for the duration of their loan, no matter their equity.
- Upfront Mortgage Insurance Premium – All FHA loans require you to pay an upfront mortgage insurance premium of 1.75% of your loan balance. This could add thousands of dollars to your closing costs compared to conventional loans without a similar fee. The UFMIP also applies to refinances, although you may qualify for a partial MIP refund if you're refinancing within three years.
Tips for Lowering Your Monthly FHA Payment
If the FHA loan calculator shows an estimated payment higher than what you were planning for, don't count out an FHA mortgage just yet. Here are some tips that can help you lower your monthly payment and improve your chances of being approved for an agency-backed loan:
- Shop around with at least three lenders to compare interest rates and estimated closing costs.
- Putting together a larger down payment – even with down payment assistance or gift funds – can lower the amount you need to borrow, improve your interest rate, and reduce your annual MIP costs.
- Improving your credit score can lead to lower interest rates. In some cases, you may be able to raise your credit score by as much as 100 points in a matter of weeks.
- Compare property tax rates when looking at potential properties. Homes in different cities, school zones, and special districts can have varying rates.
- Consider buying a lower-priced fixer-upper with the FHA 203(k) rehab loan program.
How Much FHA Loan Do I Qualify For?
Our FHA loan calculator can give you a solid idea of how much you can expect to pay each month for an FHA loan, but it’s important to remember that every borrower will have uniquely different lending needs.
For a personalized loan estimate, including your monthly FHA mortgage payments, check out today's interest rates and apply with an FHA lender issuing loans in your community.
