FHA Loan Calculator
Use our FHA Loan Calculator to determine your monthly payment, loan-to-value (LTV) ratio and total monthly housing expense for an FHA loan. We recommend that you use our calculator to evaluate multiple scenarios using different interest rates, loan lengths and mortgage amounts to determine if an FHA loan meets your financing goals.
How Our FHA Loan Calculator Works
The FHA Loan Program enables you to buy a home with a low down payment but there are numerous factors to consider including loan limits and FHA mortgage insurance. Our calculator uses the following inputs to help you understand if you should use a FHA Loan to buy a home or refinance your current mortgage:
FHA Loan Amount. This is the FHA mortgage amount you want. The higher your loan amount, the higher your monthly loan payment and other expenses such as FHA MIP.
Mortgage Rate. The lower your mortgage rate, the lower your monthly payment and the higher your rate, the higher your payment.
Loan Length. Also known as loan term, this is the length of your FHA loan. The longer the length of your loan, the lower your monthly payment. Most FHA borrowers select 30 year fixed rate loans.
Down Payment. This is how much of the home purchase price that you are putting down as compared to the part of the purchase price that comes from an FHA loan. For example, if you have $10,000 saved for a down payment on a $100,000 home then you would input 10%.
State and County for the Property Being Financed. FHA loan limits are used to determine the maximum mortgage amount you are eligible for. FHA limits vary by location as counties with higher housing costs have higher limits and areas with lower home price have lower limits.
Number of Units in the Property. The loan limits also depend on the number of units in the property being financed up to a maximum of four units. The more units in a property, the higher the loan loan limit.
Our FHA Loan Calculator enables you to understand the following key items:
Monthly FHA Loan Payment. Your monthly loan payment includes principal and interest and depends on your mortgage amount, interest rate and the length of your loan.
Loan-to-Value (LTV) Ratio. This is the ratio of your mortgage amount to the fair market value of the property being financed. It is important to know your LTV ratio because it helps determine what size FHA loan you are eligible for relative to the value of your home. The FHA program allows you to buy a home with a maximum LTV ratio of 96.5%. Our FHA Loan Calculator enables you to understand how your LTV ratio changes depending on your down payment.
Loan Limit Where the Property Is Located. Understand the loan limit for your area to determine if your loan is eligible for the FHA program.
Upfront FHA MIP. You are required to pay an upfront FHA mortgage insurance premium (MIP) when your loan closes. This is an extra fee for borrowers on top of your other closing costs although you may be able to include the upfront FHA MIP in your loan amount.
Ongoing FHA MIP. You are also required to pay an ongoing FHA MIP fee on a monthly basis. The ongoing MIP cost depends on your loan size, LTV ratio and mortgage length.
Estimated Property Tax and Insurance. In addition to your mortgage payment and FHA MIP, you are also required to pay property tax and homeowners insurance when you buy a home. Property tax and insurance rates vary based on property location, coverage levels and other factors.
Estimated Total Monthly Housing Expense. Our calculator shows you total monthly housing expense including your monthly mortgage payment, property tax, homeowners insurance and ongoing FHA MIP. This figure enables you to understand the all-in cost of buying a home with an FHA loan. The higher your loan amount and price home you buy, the higher your total monthly housing expense.
What You Need to Know About an FHA Loan
FHA Mortgage Limits Apply
The FHA Program applies limits that cap the loan amount you can qualify for. The loan limits vary by county and by the number of units in the property being financed, up to a maximum of four units. If you are considering using an FHA loan to buy a home it is important to understand if the mortgage amount you want is below the loan limit for your county, especially if you live in a more expensive area. You may be able to afford a relatively high monthly payment but if your loan amount exceeds the FHA mortgage limit then you may need to use a different program to buy a home. In the contiguous United States, loan limits for a single unit property range from $472,030 to $1,089,300 for more expensive counties and the limit for a four unit property ranges from $907,900 to $2,095,200. In Alaska, Hawaii, Guam and the US Virgin Islands FHA loan limits range from $1,633,950 for a property with one unit to $3,142,800 for a four unit property.
Loan Requirements
One of the positives of an FHA home loan is that it applies borrower-friendly eligibility requirements which makes the program accessible to more people. For example the FHA Program only requires a borrower credit score of 500 if you make a down payment of at least 10% of the property purchase price and a score of 580 if you make a down payment between 3.5% and 10%. The minimum credit score required for an FHA loan is lower than most other no or low down payment mortgage programs. The FHA Program also permits lenders to use a higher debt-to-income ratio for applicants with stronger financial profiles which enables you to qualify for a higher mortgage amount. This guidelines can be especially helpful for credit-challenged applicants with solid monthly incomes and relatively low debt payments. On a related note, the FHA program does not apply borrower income limits which means you can apply for the program regardless of how much money your earn.
Buy a Home with a Low Down Payment
Another advantage of an FHA home loan is that it enables you to buy a home with a low down payment which helps many people overcome one of the biggest obstacles to homeownership. While the 3.5% minimum down payment required by the FHA Program is slightly higher than some other no or low down payment programs, it is significantly less than the standard 20% down payment many people think you need to purchase a home. You may also be able to work with your lender or a local housing agency to pair an FHA loan with a down payment grant to reduce or eliminate the funds you are personally required to contribute to buy a home. You may also be able to use a personal gift or company program to pay for all or part of your down payment and closing costs which can make purchasing a home even more affordable.
Attractive Loan Terms
In addition to requiring a low down payment and applying more accommodating program requirements, FHA loan rates are usually lower than comparable conventional loan rates which is another significant positive for program participants. The lower your mortgage rate, the lower your monthly loan payment and more money you save over the life of the loan. We encourage borrowers to shop multiple lenders to find the best loan terms including the lowest interest rate and closing costs. You can also use our FHA Loan Calculator to determine your mortgage payment based on different interest rates and loan terms.
FHA Mortgage Insurance Premium (MIP)
The main drawback of the FHA Home Loan Program is that borrowers are required to pay an upfront and ongoing mortgage insurance premium which is also called FHA MIP. The MIP protects lenders in the event you default on your loan and they cannot recover the full mortgage amount. Although FHA MIP benefits lenders, the borrower is required to the fee. The upfront fee is paid at closing and can be added to your loan amount while you pay the ongoing fee monthly with your mortgage payment. Both are extra costs that you may not be required to pay with a different loan program. Another important point to know about FHA MIP is that the ongoing fee is not cancellable like private mortgage insurance (PMI), so you pay the monthly premium as long as you have the loan. In comparison, PMI is usually automatically cancelled when your loan-to-value (LTV) ratio reaches a specified level -- typically 78% -- because you have paid down your mortgage balance or your property value has increased. The upfront FHA MIP for most loans is 1.75% of the mortgage amount while the ongoing fee depends on the mortgage size, LTV ratio and loan length. You can use our FHA Loan Calculator to determine the upfront and ongoing FHA MIP depending on your mortgage amount and down payment.
No Restrictions on Property Location
The FHA program can be used to buy a home anywhere in the U.S. If you meet program eligibility and qualification requirements and your loan amount is below the FHA mortgage limit then you can use the program to buy a home regardless of where you live. Additionally, the program does not apply a property price limit which means you can buy a home with a price that is significantly higher than the loan limit as long as you make a larger down payment. This is why an FHA mortgage may be a good option for borrowers with less than perfect credit who have significant financial resources.
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Sources
"II.A.2.b. Loan-to-Value Limits." FHA Single Family Housing Policy Handbook 4000.1. Federal Housing Administration, January 2 2020. Web.
"Appendix 1.0 – Mortgage Insurance Premiums." FHA Single Family Housing Policy Handbook 4000.1. Federal Housing Administration, January 2 2020. Web.