What is an FHA loan and who qualifies for one?

An FHA loan is a mortgage insured by the Federal Housing Administration, a part of the U.S. Department of Housing and Urban Development (HUD). FHA loans are designed to help first-time and low-to-moderate-income homebuyers. To qualify you typically need a credit score of at least 580 (500–579 with 10% down), a debt-to-income ratio under 43%, steady employment, and the home must be your primary residence. FHA loans are originated by private lenders but backed by the government.

What is the minimum down payment for an FHA loan?

The minimum down payment is 3.5% of the purchase price for borrowers with a credit score of 580 or higher. If your score is between 500 and 579, you must put down at least 10%. The 3.5% minimum is one of the lowest among loan types — only VA and USDA loans allow 0% down, but those have eligibility restrictions (military service or rural location).

What is FHA MIP and how long do I have to pay it?

MIP (Mortgage Insurance Premium) is the FHA equivalent of PMI. It comes in two parts: an upfront premium of 1.75% of the loan amount (usually financed into the loan) and an annual premium paid monthly (0.15%–0.55% depending on term and LTV). For loans with less than 10% down, MIP lasts for the entire life of the loan. With 10%+ down, MIP can be cancelled after 11 years.

How is the FHA monthly payment calculated?

Your total monthly FHA payment includes principal and interest (computed on the base loan plus the financed upfront MIP), property taxes, home insurance, HOA fees, and the monthly MIP. The calculator uses the standard amortization formula M = P × [r(1+r)^n] / [(1+r)^n − 1] for the P&I portion, where P is the total loan amount including upfront MIP.

Can I cancel FHA MIP like I can cancel conventional PMI?

Only partially. For FHA loans with a case number assigned on or after June 3, 2013, MIP cannot be cancelled if your down payment was less than 10% — it lasts for the life of the loan. With 10% or more down, MIP is cancelled automatically after 11 years. The only way to remove MIP from a loan with less than 10% down is to refinance into a conventional loan once you reach 20% equity.

What are the FHA loan limits for 2024?

The 2024 FHA floor (the national low-cost-area limit) is $498,257 for a single-family home, and the ceiling (high-cost-area limit) is $766,550. Limits are higher in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Special exception areas may go up to $1,149,825. Use the FHA loan lookup on HUD's website to confirm the limit in your county.

Is an FHA loan better than a conventional loan?

It depends on your credit score and down payment. FHA is usually better if your credit score is below 680 or your down payment is under 5%, because FHA rates don't rise as steeply for lower scores and the 3.5% minimum beats conventional's 3% (which requires 680+ credit). Conventional is typically cheaper overall if you have 680+ credit and 5%+ down, because conventional PMI can be cancelled at 80% LTV while FHA MIP (with < 10% down) lasts for life.

Can I use an FHA loan for an investment property?

No. FHA loans are only for primary residences — you must move into the home within 60 days of closing and live there for at least one year. However, FHA loans can be used for multi-family properties (up to 4 units) as long as you occupy one of the units. After the one-year occupancy requirement, you can move out and rent the property.

FHA Loan Calculator

An FHA loan calculator is a free online tool that estimates your FHA mortgage payment including upfront MIP and annual MIP. It shows the total monthly payment with taxes, insurance, and HOA. Free, no sign-up required.

FHA Loan Details

Home Price?The purchase price of the home you're considering buying.

Down Payment

Interest Rate?The annual interest rate on your mortgage loan.

Loan Term?The length of your mortgage in years. Common terms are 15 or 30 years.

Property Tax Rate?The annual property tax rate as a percentage of home value.

Home Insurance?Annual homeowners insurance premium.

HOA Fees?Monthly homeowners association (HOA) fees, if applicable.

End of inputs

FHA Loan Results

Monthly Payment

$1,928.14

Total / month

Total Loan Amount

$245,471.88

incl. upfront MIP

Total Interest

$284,349.05

Over 30 years

Upfront MIP

$4,221.88

1.75% of base loan

Monthly MIP

$110.57

0.55%/yr

Base Loan

$241,250.00

Before upfront MIP

Monthly Payment Breakdown

Amortization Schedule

Payment Schedule

Month	Principal	Interest	Balance

360 months · Showing 0 rows

Key Insights

Over the life of this loan you'll pay $284,349.05 in interest plus $39,805.20 in MIP — a total of $324,154.25, which exceeds the principal. A shorter term or extra payments could dramatically reduce this.

FHA is a strong fit for your scenario: low down payment with a loan under the conforming limit. FHA's 3.5% minimum is more lenient than conventional's 3% (which requires a 680+ credit score), and FHA rates don't tier as aggressively for lower credit scores.

Your down payment of 3.50% meets the FHA 3.5% minimum. A larger down payment (10%+) would reduce your loan amount and let you cancel MIP after 11 years instead of paying it for the full loan term.

Your monthly MIP of $110.57 adds $1,326.84 per year to your housing costs. Once your loan-to-value reaches 78% (or after 11 years with 10%+ down), this fee drops off.

Your FHA rate of 6.00% is in line with recent market averages. FHA loans often offer rates 0.125%–0.25% lower than conventional for borrowers with credit scores below 740, so this is competitive.

FHA MIP: Upfront MIP of $4,221.88 (1.75%) is financed into the loan. Monthly MIP of $110.57 (0.55%/yr) is included in your monthly payment.

Guide

How to Use This Calculator

1Enter the home price you're considering in the Home Price field.
2Adjust the down payment. FHA requires a minimum of 3.5% — the calculator enforces this floor automatically.
3Set the interest rate. FHA rates vary by lender and credit score; check with FHA-approved lenders for your actual quote.
4Choose the loan term — 30 years for lower monthly payments, 15 years to save on interest and reduce your MIP rate.
5Add the annual property tax rate, home insurance premium, and monthly HOA fees for a complete payment picture.
6Review the upfront MIP (1.75%, financed into the loan) and monthly MIP shown in the results panel.
7Use the AI insights to see how your down payment, MIP burden, and rate compare to FHA benchmarks.

Formula

How It's Calculated

The FHA monthly payment is calculated in three steps:

1. Base loan amount = Home Price − Down Payment (min 3.5%)
2. Total loan amount = Base loan + Upfront MIP (1.75% of base loan)
3. Monthly P&I = M = P × [r(1+r)^n] / [(1+r)^n − 1]
   where P = total loan amount, r = monthly rate, n = months

Total monthly payment = P&I + (Property Tax ÷ 12) + (Insurance ÷ 12)
                       + HOA + Monthly MIP

Annual MIP rates (paid monthly):
  • 30-year, LTV > 90%:  0.55% of base loan
  • 30-year, LTV ≤ 90%:  0.50% of base loan
  • 15-year, LTV > 90%:  0.40% of base loan
  • 15-year, LTV ≤ 90%:  0.15% of base loan
  • High-balance loans (over $766,550): add 0.05%

Example: $250,000 home, 3.5% down, 6% rate, 30 years
  • Base loan = $241,250
  • Upfront MIP = $4,221.88
  • Total loan = $245,471.88
  • P&I = $1,471.32
  • Monthly MIP (0.55%) = $110.57
  • Property tax (1.1%) = $229.17
  • Insurance ($1,400/yr) = $116.67
  • Total = $1,927.73/month

Glossary

Key Terms

FAQ

Frequently Asked Questions

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