FHA Loan Calculator

FHA has two types of mortgage insurance premiums (MIP):

1. Upfront Mortgage Insurance Premium (UFMIP):

• Rate: 1.75% of the base loan amount
• On a $337,750 loan: $5,911
• Usually rolled into the loan (not paid in cash)
• This increases your loan balance and total interest

2. Annual Mortgage Insurance Premium:

• Rate: 0.55% per year for most FHA loans (30-year, LTV > 95%)
• On a $343,661 loan: $1,890/year = $157/month
• Paid monthly as part of your mortgage payment
• Decreases slightly each year as balance drops

Total MIP cost on a $350K home (3.5% down, 30-year):

• Upfront MIP: $5,911 (rolled into loan)
• Annual MIP over 30 years: ~$42,000
• Total MIP cost: ~$47,900
• That's roughly 14% of the original home price

MIP duration rules:

• Less than 10% down: MIP for the life of the loan
• 10% or more down: MIP for 11 years
• This is why many FHA borrowers refinance to conventional once they reach 20% equity

It depends on your credit score, down payment, and how long you'll keep the loan:

Choose FHA if:

• Credit score is 580-680
• You have less than 5% for down payment
• Your DTI is above 43%
• Down payment comes from gift funds
• You plan to refinance to conventional in 3-5 years

Choose conventional if:

• Credit score is 720+
• You can put 10-20% down
• You want PMI that drops at 20% equity
• You're buying a condo (fewer FHA-approved complexes)
• Home price exceeds FHA limits in your area

Cost comparison on $350K home:

FHA (3.5% down, 6.5%):

• Down payment: $12,250
• Monthly PI+MIP: $2,291
• MIP: Never goes away (unless refi)
• Total 30-year cost: ~$835K

Conventional (5% down, 6.75%):

• Down payment: $17,500
• Monthly PI+PMI: $2,317
• PMI drops at 20% equity (~year 7-8)
• Total 30-year cost: ~$800K

The crossover: FHA costs less monthly at first, but conventional usually wins long-term because PMI drops off. If you can put 5%+ down and have 700+ credit, conventional is often the better deal.

Not directly — but you have options:

Current FHA rules (loans originated after June 3, 2013):

• Less than 10% down: MIP lasts the entire 30-year term
• 10% or more down: MIP drops after 11 years
• There is no way to request early MIP removal

Compare to conventional PMI:

• Conventional PMI: Automatically drops at 78% LTV, or request removal at 80% LTV
• FHA MIP: Stuck for life of loan (unless 10%+ down)
• This is the biggest disadvantage of FHA loans

How to eliminate FHA MIP:

Option 1: Refinance to conventional loan

• Once you have 20% equity, refinance to conventional
• No more mortgage insurance at all
• Need 620+ credit score (ideally 700+)
• Closing costs: $3,000-8,000
• Break-even: 2-3 years of MIP savings

Option 2: Put 10% or more down initially

• MIP automatically drops after 11 years
• Requires more cash upfront
• Good strategy if you have the savings

When to refinance out of FHA:

• You've hit 20% equity (through paydown + appreciation)
• Your credit score has improved to 700+
• Current rates are equal to or lower than your FHA rate
• You plan to stay in the home 3+ more years
• Typically possible after 2-5 years of homeownership

FHA sets maximum loan amounts that vary by county:

2025 FHA loan limits:

• Floor (low-cost areas): $498,257
• Ceiling (high-cost areas): $1,149,825
• Most counties fall somewhere between these limits
• Limits are for one-unit properties (primary residence)

High-cost area examples (2025):

• San Francisco, CA: $1,149,825
• New York City, NY: $1,149,825
• Los Angeles, CA: $1,149,825
• Seattle, WA: $977,500

Standard area examples:

• Dallas, TX: $498,257
• Atlanta, GA: $498,257
• Phoenix, AZ: $498,257
• Orlando, FL: $498,257

If the home exceeds FHA limits:

• You cannot use an FHA loan
• Must go conventional, jumbo, or VA (if eligible)
• Some counties have higher limits than you'd expect — always check

Multi-unit FHA limits (you live in one unit):

• 2-unit: Up to $637,950 (floor) / $1,472,250 (ceiling)
• 3-unit: Up to $771,125 / $1,779,525
• 4-unit: Up to $958,350 / $2,211,600
• Great strategy: Buy a 2-4 unit, live in one, rent the others

FHA has the most flexible credit requirements of any major loan type:

Minimum credit scores:

• 580+: Qualify for 3.5% down payment
• 500-579: Qualify with 10% down payment
• Below 500: Not eligible for FHA

What your credit score really means for FHA:

580-619 (Minimum qualifying):

• 3.5% down payment allowed
• Higher interest rate (0.5-1% above best rates)
• Fewer lenders willing to approve
• May need strong compensating factors

620-679 (Below average):

• Most lenders comfortable approving
• Slightly above-average interest rate
• Standard FHA terms available

680-719 (Average to good):

• Competitive interest rates
• Wide selection of lenders
• Start considering conventional as alternative

720+ (Good to excellent):

• Best FHA rates available
• Conventional may be better option (PMI drops off)
• Shop both FHA and conventional
• Your credit is strong enough for best conventional terms

How to improve your score before applying:

• Pay all bills on time for 6+ months
• Pay down credit card balances below 30% of limits
• Don't open new credit accounts
• Dispute any errors on credit reports
• Become an authorized user on someone's old card

FHA closing costs are similar to conventional, plus the upfront MIP:

Total cash needed at closing on a $350K home (3.5% down):

• Down payment: $12,250 (3.5%)
• Closing costs: $7,000-14,000 (2-4% of price)
• Upfront MIP: Usually rolled into loan (not cash)
• Total cash: $19,250-$26,250

Typical FHA closing costs breakdown:

• Loan origination fee: $1,500-3,500 (0.5-1% of loan)
• Appraisal: $400-700 (FHA appraisals are stricter)
• Title insurance: $1,000-3,000
• Attorney/settlement fees: $500-1,500
• Recording fees: $100-500
• Credit report: $30-50
• Flood certification: $15-25
• Prepaid items: $2,000-4,000 (taxes, insurance, interest)

Ways to reduce closing costs:

• Negotiate seller concessions (up to 6% of price with FHA)
• Ask lender for credits (in exchange for slightly higher rate)
• Shop multiple lenders (fees vary significantly)
• Look for down payment assistance programs in your state
• FHA allows gift funds for both down payment and closing costs

Seller concessions (powerful with FHA):

• FHA allows seller to pay up to 6% of the price toward your costs
• On $350K home: Seller can cover up to $21,000 of your costs
• Negotiate this into the purchase contract
• Seller raises price by $10K, pays $10K of your closing costs
• Your cash needed drops dramatically