FHA Vs VA Loan Calculator

Loan Payment Equations:

\[ \text{FHA PMT} = PV \times \frac{r_{FHA}}{1 - (1 + r_{FHA})^{-n}} + MIP \] \[ \text{VA PMT} = PV \times \frac{r_{VA}}{1 - (1 + r_{VA})^{-n}} \]

Loan Amount (PV):

USD

FHA Interest Rate (r_FHA):

decimal

VA Interest Rate (r_VA):

decimal

Loan Term (n):

months

Monthly MIP (MIP):

USD

FHA Monthly Payment:

VA Monthly Payment:

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1. What is FHA vs VA Loan Comparison?

This calculator compares monthly payments between FHA (Federal Housing Administration) and VA (Veterans Affairs) loans. FHA loans require mortgage insurance (MIP), while VA loans typically don't require monthly mortgage insurance.

2. How Does the Calculator Work?

The calculator uses standard loan payment formulas for both loan types:

\[ \text{FHA PMT} = PV \times \frac{r_{FHA}}{1 - (1 + r_{FHA})^{-n}} + MIP \] \[ \text{VA PMT} = PV \times \frac{r_{VA}}{1 - (1 + r_{VA})^{-n}} \]

Where:

\( PV \) — Loan principal amount
\( r_{FHA} \) — FHA monthly interest rate (annual rate ÷ 12)
\( r_{VA} \) — VA monthly interest rate (annual rate ÷ 12)
\( n \) — Total number of payments (loan term in months)
\( MIP \) — FHA monthly mortgage insurance premium

Explanation: The formulas calculate the fixed monthly payment needed to pay off the loan over its term, with FHA including the additional MIP cost.

3. Importance of Loan Comparison

Details: Comparing FHA and VA loans helps borrowers understand the true cost difference between these government-backed loan programs, especially considering FHA's mortgage insurance requirements.

4. Using the Calculator

Tips: Enter loan amount in USD, interest rates as decimals (e.g., 0.035 for 3.5%), loan term in months, and FHA's monthly MIP amount. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does FHA have MIP while VA doesn't?
A: VA loans are guaranteed by the government without monthly insurance, while FHA requires mortgage insurance to protect lenders against defaults.

Q2: Which loan is typically cheaper?
A: VA loans are usually cheaper due to no MIP, but interest rates and eligibility differ. VA loans are only for qualified veterans and service members.

Q3: Can I remove MIP from FHA loans?
A: On most FHA loans after June 2013, MIP lasts for the life of the loan unless you refinance to a non-FHA loan.

Q4: What's not included in this calculation?
A: This doesn't include property taxes, homeowners insurance, or VA funding fee (which can be financed into VA loans).

Q5: How accurate is this comparison?
A: This shows the basic payment difference but consult a lender for exact figures including all fees and your specific eligibility.