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FHA Loan Payment Formula:
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An FHA loan is a mortgage insured by the Federal Housing Administration, designed to help lower-income borrowers qualify for home loans. These loans typically require lower down payments (as low as 3.5%) and have more flexible qualification requirements than conventional loans.
The calculator uses the standard loan payment formula with added MIP:
Where:
Explanation: The formula calculates the standard amortizing payment plus the monthly mortgage insurance premium required for FHA loans.
Details: FHA loans require both an upfront MIP (1.75% of loan amount) and annual MIP (0.85% of loan amount, paid monthly). This calculator includes the monthly MIP but not the upfront premium.
Tips: Enter loan amount in USD, annual interest rate as a percentage (e.g., 3.5 for 3.5%), and loan term in years. All values must be positive numbers.
Q1: How long do I pay MIP on an FHA loan?
A: For loans with ≤10% down, MIP lasts the life of the loan. For loans with ≥10% down, MIP continues for 11 years.
Q2: Can I remove MIP from my FHA loan?
A: You can refinance to a conventional loan once you have 20% equity, or if your loan was originated after June 3, 2013 with ≥10% down, MIP drops after 11 years.
Q3: What's the difference between MIP and PMI?
A: MIP is for FHA loans and is required regardless of down payment. PMI is for conventional loans and can be removed once 20% equity is reached.
Q4: Are FHA interest rates better than conventional?
A: FHA rates are often comparable or slightly better, but the added MIP costs may make conventional loans cheaper overall for borrowers with good credit.
Q5: What are FHA loan limits?
A: Limits vary by county, ranging from $420,680 to $970,800 in high-cost areas (2022 figures).