1. What is an FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration that allows borrowers to finance homes with lower down payments and credit scores than conventional loans. FHA loans permit rolling closing costs into the loan amount.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula with adjusted principal:

Where:

• \( PV \) — Base loan amount (USD)
• \( Closing\ Costs \) — Fees added to loan (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (years × 12)
• \( PMT \) — Monthly payment amount (USD)

Explanation: The formula calculates the fixed monthly payment needed to fully amortize the loan (including closing costs) over the specified term.

3. Understanding Closing Costs

Details: FHA closing costs typically range 2-5% of the loan amount and may include appraisal fees, title insurance, origination fees, and prepaid items. These can often be rolled into the loan.

4. Using the Calculator

Tips: Enter the base loan amount, closing costs (if rolling into loan), interest rate, and loan term. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the maximum FHA loan amount?
A: Limits vary by county and range from $498,257 to $1,149,825 in high-cost areas (2023 limits).

Q2: What's the minimum down payment for FHA?
A: 3.5% with credit score ≥580, 10% for scores 500-579.

Q3: Can all closing costs be rolled into the loan?
A: Most can, but prepaid items (insurance, taxes) typically need upfront payment.

Q4: What's the mortgage insurance requirement?
A: FHA requires both upfront (1.75% of loan) and annual (0.15-0.75%) mortgage insurance.

Q5: How does this differ from conventional loans?
A: FHA allows higher debt-to-income ratios and more flexible qualification standards than conventional loans.