FHA Loan Calculator: Check Your FHA Mortgage Payment

FHA home loans require just 3.5% down and are ultra-lenient on credit scores and employment history compared to other loan types. The first step to seeing if FHA can make you a homeowner is to run the numbers with this FHA mortgage calculator.

Verify your FHA loan eligibility (Jul 27th, 2021)
Upfront MIP (1.75%):
Monthly MIP Rate:
Total Loan Amount:

Payment Breakdown

  • Principal and Interest
  • FHA Mortgage Insurance
  • Property Tax
  • Homeowners Insurance
  • HOA/Other

*You could save up to $3,000 in interest payments by comparing rates from multiple lenders

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FHA mortgage eligibility

FHA mortgages have great perks for first-time home buyers. But to use this loan program, you need to meet requirements set by the Federal Housing Administration and your FHA-approved lender.

FHA loans are typically available to those who meet the following qualifications:

  • A credit score of 580 or higher (lower scores may be eligible with 10% down)
  • A 3.5% down payment
  • debt-to-income ratio of 43% or less
  • 1-2 years of consistent employment history (most likely 2 years if self-employed)
  • A property that meets FHA standards or is eligible for FHA 203k financing
  • A loan amount within 2021 FHA loan limits; currently $356,362 in most counties

These are general guidelines, however, and lenders have often have flexibility to approve loan applications that are weaker in one area but stronger in others. For instance, you might get away with a higher debt-to-income ratio if your credit score is good.

If you’re not sure whether you’d qualify for financing, check your eligibility with a few different mortgage lenders.

Many potential home buyers are FHA-eligible but don’t know it yet.

Verify your FHA loan eligibility (Jul 27th, 2021)

How does an FHA loan work?

FHA loans are a home buying program backed by the Federal Housing Administration.

This agency — which is an arm of the Department of Housing and Urban Development (HUD) — uses its FHA mortgage program to make homeownership more accessible to disadvantaged home buyers.

FHA does this by lowering the upfront barrier to home buying.

Reduced down payments and lower credit score requirements make homeownership more accessible to buyers who might not otherwise qualify for a mortgage.

Although FHA loans are backed by the federal government, they’re originated (‘made’) by private lenders. Most major lenders are FHA-approved, so it’s relatively easy to shop around and find your best deal on an FHA mortgage.

If you have a sub-par credit score, low savings, or high levels of debt, an FHA mortgage could help you get into a new home sooner rather than later.

FHA mortgage calculator definitions

Many first-time home buyers aren’t aware of all the costs associated with homeownership.

When you pay your mortgage, you’re not just repaying loan principal and interest to your lender. You also need to pay homeowners insurance, property taxes, and other associated costs.

The FHA mortgage calculator above lets you estimate your ‘true’ payment when all these fees are included. This will help you get a more accurate number and figure out how much house you can really afford with an FHA loan.

Here’s a breakdown to help you understand each of the terms and fees included in our FHA loan calculator:

Down payment. This is the dollar amount you put toward your home purchase. FHA requires a minimum down payment of 3.5% of the purchase price. This can come from a down payment gift or an eligible down payment assistance program.

Loan term. This is the fixed amount of time you have to pay off your mortgage loan. Most home buyers choose a 30-year, fixed rate mortgage, which has equal payments over the life of the loan. 15-year fixed-rate loans are also available via the FHA program. FHA offers adjustable-rate mortgages, too, though these are far less popular because the mortgage rate and payment can increase during the loan term.

Interest rate. This is the annual rate your mortgage lender charges as a cost of borrowing. Mortgage interest rates are expressed as a percentage of the loan amount. For example, if your loan amount is $150,000 and your interest rate is 3.0%, you’d pay $4,500 in interest during the first year (0.03 x 150,000 = 4,500).

Principal and interest. This is the amount that goes toward paying off your loan balance plus interest due to your lender each month. This remains constant for the life of a fixed-rate loan.

FHA mortgage insurance. FHA requires a monthly fee that is a lot like private mortgage insurance (PMI). This fee, called FHA Mortgage Insurance Premium (MIP), is a type of insurance that protect lenders against loss in case of a foreclosure. FHA charges an upfront mortgage insurance premium (UFMIP) equal to 1.75% of the loan amount. This can be rolled into your loan balance. It also charges an annual mortgage insurance premium, usually equal to 0.85% of your loan amount. Annual MIP is paid in monthly installments along with your mortgage payment.

Property tax. The county or municipality in which the home is located charges a certain amount per year in taxes. This cost is split into 12 installments and collected each month with your mortgage payment. Your lender collects this fee because the county can seize a home if property taxes are not paid. The calculator estimates property taxes based on averages from tax-rates.org.

Homeowners insurance. Lenders require you to insure your home from fire and other damages. This fee is collected with your mortgage payment, and the lender sends the payment to your insurance company each year.

HOA/Other. If you are buying a condo or a home in a Planned Unit Development (PUD), you may need to pay homeowners association (HOA) dues. Lenders factor in this cost when determining your DTI ratios. You may put in other home-related fees such as flood insurance in this field, but don’t include things like utility costs.

Mortgage escrow. Property taxes and homeowners insurance are typically paid to your lender each month along with your mortgage payment. The taxes and insurance are kept in an ‘escrow account’ until they become due, at which time your lender pays them to the correct company or agency. 

Verify your FHA loan eligibility (Jul 27th, 2021)

FHA mortgage FAQ

How much can I qualify for with an FHA loan?

FHA sets loan limits for each county, which dictate the maximum amount borrowers can qualify for via the FHA program. Loan limits are higher in areas with high-cost real estate, and borrowers purchasing 2-4-unit properties can often get a larger loan amount than those buying single-family homes. Not all borrowers will qualify for the maximum loan size, though. The amount you can qualify for with FHA depends on your down payment, income, debts, and credit.

What’s the minimum down payment with FHA?

Home buyers must put at least 3.5% down on an FHA loan. That’s because FHA’s maximum loan-to-value ratio is 96.5% — meaning your loan amount can’t be more than 96.5% of the home’s value. By making a 3.5% down payment, you push your loan amount below FHA’s LTV threshold.

What happens if I put 20% down on an FHA loan?

Unlike conventional mortgages, FHA loans do not waive mortgage insurance when you put 20% down. All FHA homeowners are required to pay mortgage insurance regardless of down payment — though if you put at least 10% down, you’ll only pay it for 11 years instead of the life of the loan. If you have 20% down and a credit score above 620, you’re likely better off with a conventional loan because you won’t have to pay for PMI.

Do you pay closing costs with an FHA loan?

Yes, you have to pay closing costs on an FHA mortgage just like any other loan type. FHA loan closing costs are close to conventional closing costs: about 2-5% of the loan amount depending on your home price and lender. FHA also charges an upfront mortgage insurance fee equal to 1.75% of the loan amount. Most borrowers roll this into the loan to avoid paying it upfront. But if you choose to pay upfront, this fee will increase your closing costs substantially.

What’s included in an FHA loan payment?

A typical FHA loan payment includes principal and interest on the loan balance, mortgage insurance premiums, monthly homeowners insurance fees, and monthly property taxes. FHA homeowners in a condo or PUD will also have to pay homeowners association (HOA) dues every month.

Do FHA loans have higher monthly payments?

That depends. FHA loans require mortgage insurance, which will increase your monthly mortgage payments. But so do conventional loans with less than 20% down. The cheaper loan for you will depend on your down payment and credit score; if you have great credit and 5% down or more, a conventional loan will likely have lower monthly payments. But if you have low credit and 3-3.5% down, the PMI on a conventional loan could be more expensive than FHA MIP. Talk to a lender to compare payment amounts and find out which loan is best for you.  

Can closing costs be included on an FHA loan?

Typically, the only closing cost that can be included in an FHA loan is the upfront mortgage insurance premium (upfront MIP). Most other closing costs will need to be paid out of pocket when purchasing a home or using the FHA Streamline Refinance program.

What is the interest rate on an FHA loan?

FHA mortgage rates are often lower than rates for conventional mortgages. However, a lower interest rate does not always equate to a lower monthly payment. FHA mortgage insurance will increase your payments and the overall cost of the loan, even if the base rate is lower than for other loan types. Looking at annual percentage rate (APR) can be helpful in determining the ‘true’ cost of a loan, since APR accounts for fees as well as interest.

Do all FHA loans have the same interest rates?

No. FHA loan rates are not set by the government, and they are not consistent from one FHA loan to the next. FHA-approved lenders get to set their own mortgage rates, and some may have more affordable pricing than others. In addition, rates can vary by borrower, with the lowest rates often going to the ‘safest’ borrowers, and higher rates going to borrowers with lower credit and other risky loan characteristics.

Check your FHA loan eligibility

Many home buyers qualify for FHA — they just don’t know it yet. Check with a lender to verify your eligibility and find out how much house you can afford via the FHA mortgage program. You can get started below.

Verify your new rate (Jul 27th, 2021)

Sources:

2018 Freddie Mac Research on Consumers