FHA Loan Calculator

Formula

Base Loan = Price × (1 - Down%) Upfront MIP = Base Loan × 0.0175 Total Financed Loan (L) = Base Loan + Upfront MIP Monthly P&I = L × [r(1 + r)^n] / [(1 + r)^n - 1] Monthly MIP = (Base Loan × Annual MIP Rate) / 12 Total Monthly Payment = Monthly P&I + Monthly MIP

Price represents the purchase price of the home; Down% is the down payment percentage (minimum 3.5% for standard FHA); Base Loan is the purchase price minus the down payment; Upfront MIP is the mandatory 1.75% fee financed into the balance; L is the total financed loan amount; r is the monthly interest rate (annual rate divided by 12); n is the total number of monthly payments (years × 12); Annual MIP Rate is determined by HUD guidelines (0.55% for 30-year terms with less than 5% down; 0.50% with 5% or more down; 0.15% to 0.40% for 15-year terms).

Worked example

Home price

300000

Down payment

3.5

Interest rate

6.25

Loan term

30

• Monthly payment (P&I + MIP): 1,946.38
• Principal & interest: 1,813.70
• Monthly MIP: 132.69
• Upfront MIP (financed): 5,066.25
• Total loan amount: 294,566.25
• Annual MIP rate: 0.55%

What the FHA Loan Calculator Calculates

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration, an agency within the U.S. Department of Housing and Urban Development (HUD). Because these loans are backed by the federal government, lenders can offer competitive interest rates and down payments as low as 3.5% to borrowers who might not qualify for conventional financing.

To offset the risk of lower down payments, HUD requires borrowers to pay two forms of mortgage insurance:

1. Upfront Mortgage Insurance Premium (UFMIP): A one-time fee equal to 1.75% of the base loan amount, almost always added to the final loan balance.
2. Annual Mortgage Insurance Premium (MIP): An ongoing fee divided into 12 monthly installments and billed alongside your principal and interest payment.

This calculator determines your financed loan balance, monthly principal and interest (P&I), upfront insurance cost, monthly MIP charge, and total monthly base payment.

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Step-by-Step Worked Example

To understand how the math works, consider a home purchase with standard parameters:

• Home price: $300,000
• Down payment: 3.5% ($10,500)
• Interest rate: 6.25%
• Loan term: 30 years (360 months)

1. Base Loan and Upfront MIP

First, calculate the base loan amount by subtracting the down payment: $$\text{Base Loan} = $300,000 \times (1 - 0.035) = $289,500$$

Next, calculate the mandatory 1.75% Upfront MIP: $$\text{Upfront MIP} = $289,500 \times 0.0175 = $5,066.25$$

Financing this fee into the balance yields the total loan amount ($L$): $$L = $289,500 + $5,066.25 = $294,566.25$$

2. Principal & Interest Payment

Using the standard amortization formula with a monthly interest rate of $0.0625 / 12 \approx 0.00520833$ and 360 payments: $$\text{Monthly P&I} = $294,566.25 \times \frac{0.00520833(1 + 0.00520833)^{360}}{(1 + 0.00520833)^{360} - 1} = $1,813.70$$

3. Monthly Mortgage Insurance Premium (MIP)

Because the term is 30 years and the down payment is under 5%, the standard annual MIP rate is 0.55%: $$\text{Monthly MIP} = \frac{$289,500 \times 0.0055}{12} = $132.69$$

4. Total Monthly Obligation

Adding both monthly obligations produces the complete baseline payment: $$\text{Total Payment} = $1,813.70 + $132.69 = $1,946.38$$

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How to Read the Results

• Monthly Payment (P&I + MIP): This figure ($1,946.38) reflects your minimum contractual debt service to the lender. Keep in mind that full monthly escrow payments also include property taxes and hazard insurance.
• Principal & Interest: The core repayment portion ($1,813.70). Over time, the interest share decreases while the principal repayment share increases.
• Monthly MIP: The recurring insurance cost ($132.69). On a 30-year term with 3.5% down, this cost remains for the entire life of the mortgage unless refinanced.
• Upfront MIP (Financed): The $5,066.25 charge increases your debt above the base purchase borrowing amount. While it saves out-of-pocket cash at closing, it accumulates interest over the life of the loan.
• Annual MIP Rate: Benchmark rates are 0.55% for down payments under 5% and 0.50% for down payments at or above 5% on 30-year notes.

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Practical Tips for FHA Borrowers

• Evaluate 5% Down: Increasing your down payment from 3.5% to 5.0% lowers your annual MIP rate from 0.55% to 0.50%, saving money every month in addition to reducing your financed loan balance.
• Consider an Exit Strategy: Because FHA MIP is permanent for low-down-payment loans, plan to monitor your local housing market. Once your property reaches approximately 20% equity, evaluate refinancing into a conventional mortgage to eliminate monthly insurance altogether.
• Prepare for Escrow: Remember that the payment shown does not include homeowners insurance or municipal property taxes. A common rule of thumb is to set aside an additional 15% to 25% of your principal and interest payment to cover these escrow items.

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When Not to Rely on This Calculator

• Jumbo Loan Amounts: FHA loans are subject to statutory lending limits that vary by county. If your target purchase price exceeds your local county limit, an FHA loan cannot be used.
• Condominium Purchases: FHA loans can only be used on condominiums in HUD-approved developments. If a community is unapproved, standard FHA terms do not apply.
• Non-Standard Loan Terms: If you are exploring adjustable-rate mortgages (ARMs) or 20-year terms, premium tiers and interest calculations differ from standard 15-year and 30-year fixed structures.

Comparison

Scenario	Input	Result
Lower input	Home price: 240000	Monthly payment (P&I + MIP): 1,557.11
Base example	Home price: 300000	Monthly payment (P&I + MIP): 1,946.38
Higher input	Home price: 360000	Monthly payment (P&I + MIP): 2,335.66

Common mistakes

• Confusing FHA Mortgage Insurance Premium (MIP) with Conventional Private Mortgage Insurance (PMI), which can typically be canceled at 20% equity.
• Forgetting that the 1.75% Upfront MIP is usually added to the loan balance, which increases the monthly principal and interest charges.
• Assuming annual MIP drops off after reaching 20% equity (on loans with under 10% down, MIP lasts for the entire loan life unless refinanced).
• Calculating monthly MIP from the total financed loan instead of the base loan balance.
• Overlooking county-specific FHA loan limits, which cap the maximum insurable loan amount.

Checklist

• Verify your credit score meets the 580 minimum for 3.5% down (or 500-579 for 10% down).
• Confirm the target home price falls within your county's FHA loan limits.
• Budget for both the upfront 1.75% MIP and ongoing annual MIP payments.
• Account for property taxes, homeowners insurance, and HOA dues outside of base P&I and MIP.
• Ensure your debt-to-income (DTI) ratio meets lender underwriting standards (typically 43% to 50%).
• Verify that the property meets HUD's minimum property health and safety standards.

Calculators Percentage Editorial Team

Calculator guides from the Calculators Percentage team. These introductory examples are educational, not professional advice.

Last reviewed: November 12, 2026

This calculator is intended solely for educational and illustrative purposes. Actual loan terms, insurance premiums, and monthly obligations depend on individual lender underwriting, credit history, and current government guidelines.