FHA Loan Calculator

How Does an FHA Loan Work?

FHA loans are government-insured mortgages designed for borrowers who may not qualify for conventional financing. Enter the home price, down payment percentage, interest rate, term, property taxes, and insurance in the calculator above to see the loan amount, principal and interest payment, mortgage insurance premium (MIP), tax and insurance escrow, and total monthly payment. FHA loans accept lower credit scores and smaller down payments than conventional mortgages, making homeownership accessible to first-time buyers and those rebuilding credit.

FHA Minimum Requirements

Down payment: 3.5% with a 580+ credit score. 10% with a 500-579 score. Credit score: 580 minimum for 3.5% down (many lenders require 620+ as an overlay). Debt-to-income: up to 43% standard, up to 50% with compensating factors. Employment: two years of steady employment history. Property: must be a primary residence (no investment properties). Property must pass FHA appraisal standards for safety and habitability. On a $300,000 home with 3.5% down: $10,500 down payment, $289,500 loan amount. The low down payment is the primary appeal - conventional loans typically require 5-20% down for comparable approval odds.

FHA Mortgage Insurance: Upfront and Annual

FHA charges two forms of mortgage insurance. Upfront MIP (UFMIP): 1.75% of the loan amount, typically financed into the loan. On a $290,000 loan: $5,075 added to the balance, making the financed amount $295,075. Annual MIP: 0.55% of the loan balance for most borrowers (30-year term, LTV above 95%), divided by 12 and added to each monthly payment. On a $295,000 balance: $135/month in MIP. Critical distinction from conventional PMI: FHA MIP for loans originated after June 2013 with less than 10% down cannot be removed for the life of the loan. The only way to eliminate it is refinancing into a conventional loan once you reach 20% equity.

FHA Loan Limits by Area

FHA loan limits vary by county and are updated annually. The 2024 floor (lowest-cost areas): $498,257. The ceiling (highest-cost areas): $1,149,825. Most metropolitan areas fall between these extremes. San Francisco County: $1,149,825. Los Angeles: $1,149,825. New York City (Manhattan): $1,149,825. Dallas-Fort Worth: $531,300. Atlanta: $498,257. Check the FHA loan limit for your specific county at HUD.gov before house hunting. Attempting to purchase above the local FHA limit requires conventional or jumbo financing, which have stricter qualification requirements.

FHA vs Conventional: Which Costs Less?

FHA advantages: lower credit score requirements, 3.5% down payment, more lenient DTI limits. Conventional advantages: PMI can be removed at 20% equity (FHA MIP is permanent for most loans), no UFMIP, potentially lower total cost over the loan life. On a $300,000 home with 5% down: FHA total monthly (P&I + MIP + taxes + insurance) approximately $2,280. Conventional with PMI: approximately $2,220. After reaching 20% equity (approximately year 8-9), the conventional payment drops to $2,050 (PMI removed) while FHA stays at $2,220. Over 30 years, the conventional loan costs $15,000-$25,000 less in total. FHA wins on accessibility; conventional wins on long-term cost for borrowers who qualify for both.

FHA Property Requirements and Appraisal

FHA appraisals assess both value and property condition. The home must meet minimum standards: functional heating, plumbing, and electrical systems. Sound roof with at least two years of remaining life. No peeling paint in pre-1978 homes (lead paint concern). Safe access and egress. No structural defects. Working kitchen and bathroom. These standards protect the buyer from purchasing a home with immediate safety or habitability issues. Homes that fail FHA appraisal can be repaired and re-inspected, but the repairs must be completed before closing. Sellers of distressed properties sometimes refuse FHA offers because of the appraisal requirements, limiting inventory access for FHA buyers.

FHA Streamline Refinance

FHA-to-FHA refinancing through the Streamline program requires minimal documentation: no new appraisal (in most cases), no income verification, and reduced UFMIP (0.01% for refinances within the first 3 years). The Streamline is designed to lower the rate and payment on an existing FHA loan with minimal paperwork and cost. Requirements: at least 210 days and 6 payments on the current FHA loan, the refinance must produce a "net tangible benefit" (typically a rate reduction of at least 0.5%), and the loan must be current with no late payments in the last 12 months. This is one of the fastest and easiest refinance options available in any loan program.

First-Time Buyer Programs That Pair with FHA

Down payment assistance (DPA) programs in many states and cities provide grants or forgivable loans covering the 3.5% FHA down payment. These programs typically require income below 80-120% of area median income and completion of a homebuyer education course. State housing finance agencies (e.g., CalHFA, NCHFA, TDHCA) offer below-market-rate FHA-compatible first mortgages with DPA. Some programs provide up to 5% of the purchase price in assistance. Combining FHA financing with DPA can reduce the total cash needed at closing to near zero - covering only prepaid items and any closing costs not covered by seller concessions (FHA allows up to 6% in seller concessions toward closing costs).

Frequently asked questions