FHA Loan Calculator

FHA Loan Payment Formula:

\[ PMT = PV \times r / [1 - (1 + r)^{-n}] + MIP \]

Loan Amount (PV):

USD

Interest Rate:

Loan Term:

years

Monthly Insurance (MIP):

USD

Monthly Payment (PMT):

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1. What is an FHA Loan?

An FHA (Federal Housing Administration) loan is a mortgage insured by the government that allows borrowers with lower credit scores and smaller down payments to qualify for home financing. These loans require mortgage insurance premiums (MIP) which are included in the monthly payment.

2. How Does the Calculator Work?

The calculator uses the FHA loan payment formula:

\[ PMT = PV \times r / [1 - (1 + r)^{-n}] + MIP \]

Where:

\( PMT \) — Monthly payment (USD)
\( PV \) — Loan principal amount (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Total number of payments (term in years × 12)
\( MIP \) — Monthly mortgage insurance premium (USD)

Explanation: The formula calculates the standard mortgage payment (principal + interest) and adds the required FHA mortgage insurance premium.

3. Understanding FHA Loan Payments

Details: FHA loans typically have lower down payment requirements (as low as 3.5%) but require both upfront and monthly mortgage insurance payments, which protect the lender in case of default.

4. Using the Calculator

Tips: Enter the loan amount in USD, interest rate as a percentage (e.g., 3.5 for 3.5%), loan term in years, and the monthly mortgage insurance premium in USD.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between MIP and PMI?
A: MIP (Mortgage Insurance Premium) is required for FHA loans, while PMI (Private Mortgage Insurance) is for conventional loans. MIP typically has different cost structures and duration requirements.

Q2: How long do I pay MIP on an FHA loan?
A: For loans with >90% LTV, MIP lasts the life of the loan. For ≤90% LTV, MIP is required for 11 years.

Q3: What credit score is needed for FHA?
A: Minimum 580 for 3.5% down payment, or 500-579 with 10% down. Individual lenders may have higher requirements.

Q4: Are FHA interest rates higher?
A: FHA rates are often comparable to conventional loans, but the added MIP increases the overall cost of borrowing.

Q5: Can I remove MIP from my FHA loan?
A: For loans originated after June 3, 2013, MIP can only be removed by refinancing to a conventional loan or paying off the mortgage.