Hong Life CalculatorsUnderstanding the FHA loan calculator — concept and principle
This calculator estimates the monthly payment on a US FHA mortgage, including principal and interest, the annual mortgage insurance premium (MIP) and your property tax, insurance and HOA. It also shows the upfront MIP added to the loan, the total loan amount, the annual MIP rate, how long MIP lasts and the loan-to-value ratio. Use it to compare an FHA loan with other options before talking to a lender.
How it is calculated
- Base loan = price − down payment; LTV = base loan ÷ price.
- Upfront MIP (UFMIP) = 1.75% of the base loan, added to the loan.
- Principal & interest = level payment on (base loan + UFMIP) at the note rate.
- Annual MIP rate (HUD Mortgagee Letter 2023-05): for terms over 15 years and base loans up to $726,200, 0.50% (LTV ≤ 95%) or 0.55% (LTV > 95%); different rates for larger loans and for terms of 15 years or less.
- Monthly MIP = annual rate × average scheduled balance in the first 12 months ÷ 12.
- MIP lasts 11 years if LTV ≤ 90%, otherwise the whole loan term.
The principle
FHA loans are insured by the Federal Housing Administration, which lets lenders accept smaller down payments, from 3.5%, and more flexible credit. Borrowers pay for that insurance twice: an upfront premium financed into the loan and an annual premium paid monthly. The annual premium is charged on the outstanding balance, so it falls slowly as you repay. With less than 10% down, MIP stays for the life of the loan unless you refinance.
Worked example
Default inputs: price $350,000, 3.5% down, 6.25%, 30 years, tax/insurance/HOA $450 a month.
- Base loan = 350,000 × 0.965 = $337,750; LTV = 96.5%.
- UFMIP = 1.75% × 337,750 ≈ $5,911; total loan ≈ $343,661.
- Principal & interest = $343,661 at 6.25% over 360 months ≈ $2,115.98.
- Annual MIP rate = 0.55% (LTV above 95%); monthly MIP in year 1 ≈ $156.67; lasts the whole term.
- Monthly payment = 2,115.98 + 156.67 + 450 ≈ $2,722.65.
| Home price | Monthly payment (P&I + MIP + tax/insurance) |
|---|---|
| 87,500 | $1,018.16 |
| 175,000 | $1,586.33 |
| 262,500 | $2,154.49 |
| 350,000 | $2,722.65 |
| 437,500 | $3,290.82 |
| 525,000 | $3,858.98 |
| 700,000 | $4,995.30 |
How to read the result
Compare the total monthly payment with your budget and with a conventional loan's payment including PMI. A larger down payment, at least 10%, would shorten MIP to 11 years. County loan limits and credit rules apply; this calculator does not check them.
Common mistakes
- Forgetting the upfront MIP added to the loan.
- Assuming FHA MIP can be cancelled like conventional PMI.
- Leaving out property tax and insurance.
- Using outdated MIP rates; they changed in 2023.
Frequently asked questions
What is the minimum down payment on an FHA loan?
3.5% for borrowers who meet the credit requirements.
How long does FHA mortgage insurance last?
11 years if your LTV is 90% or less at the start; otherwise the life of the loan.
What is UFMIP?
The upfront mortgage insurance premium, 1.75% of the base loan, usually added to the loan.
Sources: U.S. Department of Housing and Urban Development, Mortgagee Letter 2023-05 (22 Feb 2023)