FHA Loan Calculator
Work out the full cost of an FHA loan: the upfront premium, the annual mortgage insurance that most borrowers underpay attention to, and the total over the life of the loan.
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What an FHA loan actually costs
An FHA loan is a mortgage insured by the Federal Housing Administration. Because the government carries the risk of default, lenders accept lower credit scores and smaller deposits than they would on a conventional loan. The minimum down payment is 3.5 percent, which is the main reason these loans are popular with first-time buyers.
The insurance is not free and it arrives in two parts. There is an upfront premium of 1.75 percent of the base loan amount, which is almost always financed, meaning you pay interest on it for thirty years. And there is an annual premium, currently 0.55 percent for most loans, charged monthly. On a 350,000 dollar home with 3.5 percent down, the upfront premium is 5,911 dollars added to your loan and the annual premium is 154.80 dollars a month.
The detail that catches people out is how long the annual premium lasts. Put down less than 10 percent and it runs for the entire life of the loan. On these figures that is 55,729 dollars of insurance across thirty years, on a loan of 343,661 dollars. Put down 10 percent or more and it ends after eleven years, which is the difference between paying for insurance until 2056 and paying for it until 2037.
There is also a loan limit, which varies by county and is set annually. The calculator does not enforce it, so check the limit for your area before assuming an FHA loan will cover the purchase. And if you have a credit score in the mid 700s and 10 percent to put down, compare a conventional loan carefully: it will usually be cheaper once the FHA insurance is counted, because conventional mortgage insurance is cancellable and often cheaper.
How the FHA payment is calculated
The upfront premium is added to the loan, then the standard amortisation formula runs on the total. The annual premium is charged monthly on the base loan amount, not the total.
| Symbol | Meaning |
|---|---|
Base loan |
The purchase price minus your down payment |
Upfront MIP |
A one-off premium, normally financed into the loan |
Annual rate |
The annual mortgage insurance rate, 0.55 percent for most FHA loans |
Monthly MIP |
The insurance portion of your monthly payment |
The annual premium is charged on the base loan amount rather than the total, so financing the upfront premium does not increase the monthly insurance. It does, however, increase the interest you pay on it.
Worked example: 350,000 dollar home with 3.5 percent down
An FHA loan at 6.5 percent over 30 years, with the upfront premium financed.
| Figure | Result |
|---|---|
| Down payment (3.5%) | $12,250.00 |
| Base loan amount | $337,750.00 |
| Upfront insurance premium (1.75%) | $5,910.63 |
| Total loan amount | $343,660.63 |
| Principal and interest | $2,172.17 |
| Monthly mortgage insurance | $154.80 |
| Total monthly payment | $2,326.97 |
| Mortgage insurance lasts | 360 months (the full term) |
| Total mortgage insurance paid | $55,728.75 |
| Total of all payments | $837,709.56 |
You put down 12,250 dollars and borrow 343,661 dollars. The insurance alone costs 55,729 dollars over the term, on top of 438,320 dollars of interest. Raising the deposit to 10 percent would end the insurance after eleven years and save you roughly 34,000 dollars of it, which is worth modelling before you settle on 3.5 percent down.
Estimates only. Your lender's figures may differ because of fees, escrow and rounding.
Making an FHA loan work for you
Reach 10 percent down if you possibly can
The threshold matters more than any other single number. Below 10 percent down the mortgage insurance runs for the entire term; at 10 percent or more it stops after eleven years. On a 340,000 dollar loan that is roughly 34,000 dollars of difference.
Remember the upfront premium is borrowed money
Financing 1.75 percent means paying interest on it for thirty years. On a 337,750 dollar base loan the 5,911 dollar premium will accumulate roughly 7,600 dollars of interest over the term. If you have the cash and no better use for it, paying it upfront saves real money.
Compare a conventional loan before committing
FHA loans win on credit score flexibility and small deposits. They often lose on total cost. Conventional mortgage insurance can be cancelled once you have 20 percent equity, and it is frequently cheaper per month for a borrower with a decent credit score. Run both before deciding.
Check the county loan limit first
FHA loans have a maximum amount that varies by county and is updated each year. If your purchase price exceeds it, you need a larger deposit or a different loan programme. Confirming the limit takes a minute and can save you an entire application.
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Frequently asked questions
What is the minimum down payment for an FHA loan?
3.5 percent if your credit score is 580 or above, and 10 percent if it is between 500 and 579. The 3.5 percent figure is what most borrowers use and is the main reason FHA loans are popular with first-time buyers, but it comes with mortgage insurance that lasts the life of the loan.
How long do I pay FHA mortgage insurance?
If you put down less than 10 percent, the annual premium runs for the entire loan term. At 10 percent or more it ends after eleven years. That difference is worth tens of thousands of dollars, which is why pushing the deposit to 10 percent is usually the single most valuable change you can make to an FHA loan.
Can I remove FHA mortgage insurance by refinancing?
Yes. Once you have enough equity, refinancing into a conventional loan removes the FHA premium entirely, though you pay closing costs and take whatever rate is available at the time. It is often worth doing after a few years of appreciation and principal repayment.
What is the upfront mortgage insurance premium?
A one-off charge of 1.75 percent of the base loan amount. It is normally financed, so it is added to your loan rather than paid at closing, which means you pay interest on it. On the example on this page it adds 5,911 dollars to the balance and about 7,600 dollars of interest over the term.
Is an FHA loan better than a conventional loan?
For a borrower with a lower credit score or a small deposit, often yes, because FHA acceptance criteria are more forgiving. For a borrower with good credit and 10 percent or more to put down, a conventional loan is usually cheaper overall because its mortgage insurance can be cancelled. Compare both with real numbers.