For a huge share of American first-time buyers, the FHA loan is the door into homeownership that a conventional loan keeps shut. The reason fits in one number: 3.5 percent. On a $350,000 home, that is a down payment of $12,250 instead of the $70,000 a 20 percent conventional down payment demands. In exchange for that small down payment — and for credit rules that forgive a rougher past than conventional underwriting does — you pay for mortgage insurance twice: once upfront and once every month, in some cases for as long as you hold the loan. This calculator exists so you can see both charges, in dollars, before a lender's estimate buries them in fine print.

Who qualifies, in plain English.

FHA loans are insured by the Federal Housing Administration and issued by ordinary approved lenders — banks, credit unions, and mortgage companies. The headline rule is the down payment and credit pairing. With a credit score of 580 or higher, the minimum down payment is 3.5 percent. With a score between 500 and 579, you can still qualify, but the minimum jumps to 10 percent down. Below 500, borrowers are generally not eligible at all. Individual lenders often add their own stricter overlays on top of the FHA floor, so a 580 that works at one lender may meet a 620 minimum at another — shop more than one lender, because the FHA rulebook is a floor, not a guarantee of approval. The home must be your primary residence, and it has to pass an FHA appraisal that checks both value and basic health-and-safety condition standards, which is why some fixer-uppers that sail through a conventional appraisal can stall on an FHA one.

The two mortgage insurance charges.

Every FHA loan carries a Mortgage Insurance Premium, called MIP — do not confuse it with PMI, the private mortgage insurance on conventional loans; they are cousins, not twins. The first charge is the upfront mortgage insurance premium, or UFMIP: 1.75 percent of the base loan amount. Almost every borrower finances it, meaning it is added to the loan balance rather than paid in cash at closing. The second charge is the annual mortgage insurance premium. Despite the word annual, it is billed monthly, as a slice of the loan amount divided across twelve payments. For the most common case — a 30-year term with less than 5 percent down — that annual rate is 0.55 percent. This calculator applies both charges the way your loan will: the upfront premium goes into the balance, and the annual premium shows up as a monthly line next to principal and interest.

How the financed upfront premium changes your loan.

Financing the UFMIP is convenient and quietly expensive. Take the standard example used throughout this page: a $350,000 home, 3.5 percent down. Your down payment is $12,250, so your base loan amount is $337,750. The upfront premium is 1.75 percent of that: $337,750 times 0.0175 equals $5,910.63. Because it is financed, the amount you actually owe on day one is $337,750 plus $5,910.63, which is $343,660.63 — you are borrowing the fee, and you will pay interest on the fee for as long as the loan runs. At 6.5 percent over 30 years, that $5,911 slice of the balance alone grows into roughly $13,800 of payments. You can pay the UFMIP in cash at closing instead, and if you have the cash it is the cheaper choice over a full 30-year hold, but most FHA buyers are down-payment constrained by definition, which is exactly why financing it is the default. One more wrinkle: if you refinance or sell within the first few years, a partial refund of the upfront premium may apply under FHA refund schedules that shrink month by month — ask your lender to show you the schedule rather than assuming the money is simply gone.

The annual premium, rate by rate.

The annual MIP rate is set by your loan term and your loan-to-value ratio — your down payment, in other words. For terms longer than 15 years, which means the standard 30-year loan, the rate is 0.50 percent a year if your loan-to-value is 95 percent or less (roughly, 5 percent down or more), and 0.55 percent if your loan-to-value is above 95 percent (the 3.5 percent down case). For terms of 15 years or less, the rates are lower: 0.15 percent a year at 90 percent loan-to-value or below, and 0.40 percent above 90 percent. Larger loan amounts above the standard premium-chart threshold carry higher rates than these — if you are borrowing near your county's limit, have your lender confirm your exact tier, because the calculator's editable annual MIP field exists precisely so you can enter the rate from your own loan estimate. The premium itself is assessed on the loan balance, so in real life the monthly charge steps down slightly each year as your balance falls; this calculator shows the first-year monthly amount based on your starting base loan amount, which is the number you will actually see at the start of the loan.

How long MIP lasts — the rule that decides everything.

This is the single most important page in the FHA rulebook, and the one buyers most often learn too late. For FHA loans endorsed in the modern era, if your down payment is less than 10 percent, the annual MIP lasts for the entire life of the loan. It does not drop off at 20 percent equity. It does not drop off at 22 percent. Pay the balance down for twenty years and the charge is still there, smaller as the balance shrinks, but present. The only exits are paying the loan off, selling the home, or refinancing into a conventional loan once you have enough equity and a qualifying credit profile. If your down payment is 10 percent or more, the rule softens: annual MIP ends after 11 years. That single difference — life of loan versus 11 years — is worth tens of thousands of dollars, and it should shape your down payment decision if you are anywhere near the 10 percent line. On this page's standard example, the monthly MIP starts at $154.80. Eleven years in, your balance has fallen to roughly $284,000, yet because the loan began with 3.5 percent down, the premium continues anyway. A borrower who had started with 10 percent down would watch that same charge vanish at year eleven.

A worked example, dollar by dollar.

Here is the full math for the standard case, using this calculator's defaults. Home price $350,000. Down payment at 3.5 percent: $12,250. Base loan amount: $337,750. Upfront MIP at 1.75 percent: $5,910.63, financed, for a total starting balance of $343,660.63. At a 6.5 percent interest rate for 30 years, the standard amortization formula gives a principal-and-interest payment of $2,172.17 a month. The annual MIP of 0.55 percent on the $337,750 base loan is $1,857.62 for the first year, billed as $154.80 a month. Principal, interest, and MIP together: $2,326.97 a month. Now add what escrow adds. With annual property taxes of $4,200 (or $350 a month) and homeowners insurance of $2,100 a year (or $175 a month), the complete monthly payment is $2,851.97. Over the full 30 years, the interest on this loan totals roughly $438,320 — a figure worth staring at, because it is what a small down payment plus a financed insurance premium really costs across three decades, and it is why the refinance conversation in the next sections matters so much for FHA borrowers.

The 10 percent down version, for contrast.

Change one input — buy a $400,000 home with 10 percent down at 6.25 percent — and the loan changes character. The down payment is $40,000, the base loan is $360,000, and the financed upfront premium is $6,300, for a starting balance of $366,300. At a 90 percent loan-to-value, the annual MIP rate falls into the 0.50 percent tier: $150 a month. Principal and interest come to $2,255.37, so principal, interest, and MIP total $2,405.37 a month before taxes and insurance. The monthly difference versus the minimum-down structure looks modest. The lifetime difference is not: this borrower's MIP ends after 11 years, while the 3.5 percent down borrower's MIP never ends. When you compare FHA offers, run this calculator twice — once at the down payment you have, and once at 10 percent — and look at the MIP duration as hard as you look at the payment.

FHA versus conventional: MIP against PMI.

The honest comparison is not "FHA is cheaper" or "conventional is cheaper" — it is which loan is cheaper for your credit score, your down payment, and your timeline. Conventional loans require private mortgage insurance below 20 percent down, with annual rates set by private insurers based heavily on your credit score — typically 0.3 to 1.5 percent of the loan a year. A borrower with a 760 score and 10 percent down may pay PMI at a rate well below FHA's flat 0.50 percent, pays no upfront premium at all on a standard conventional loan, and — decisively — watches PMI cancel automatically at 78 percent of the original value under federal law, with the right to request cancellation at 80 percent. For that borrower, conventional usually wins going away. Flip the profile: a borrower with a 620 score and 3.5 percent down faces PMI pricing that private insurers load heavily, if a conventional approval comes at all, while FHA charges the same MIP rates it charges a 780-score borrower, because FHA premiums do not vary by credit score. For that borrower, FHA is often the only loan on the table, and its flat-rate insurance is the subsidy that makes the loan possible. The crossover question is almost always the same: how fast will you reach 20 percent equity and a conventional refinance? If the answer is two or three years, FHA's lifetime MIP is a short bridge toll. If the answer is "maybe never," model the conventional alternative just as carefully before you commit.

The refinance escape hatch, and its risks.

Because lifetime MIP is the FHA loan's biggest long-term cost, the standard play is written into many buyers' plans from day one: buy with FHA now, build equity, then refinance into a conventional loan to delete the insurance entirely. It works beautifully when home values rise and rates cooperate — appreciation can carry you to 20 percent equity faster than your payments do, and a conventional refinance at 80 percent loan-to-value removes MIP in a single closing. But treat it as a plan, not a promise. Refinancing costs money, typically thousands in closing costs, requires a fresh appraisal and a fresh credit check, and depends on interest rates at some unknowable future date: if rates rise two points, a refinance that deletes $155 a month of insurance while adding $300 a month of interest is a bad trade. There is also the FHA-to-FHA option, the streamline refinance, which lowers your rate with reduced paperwork but keeps MIP in place — useful for a rate cut, useless for escaping insurance. Run the numbers both ways with real quotes when the time comes, and never let a lender refinance you on the strength of the monthly payment alone; compare total cost over the years you actually expect to keep the loan.

Loan limits and the rest of the rulebook.

FHA does not lend any amount anywhere. Loan limits are set by county, are updated every year, and blend a national floor for lower-cost areas with higher ceilings in expensive housing markets — the limit on the same style of home can differ by hundreds of thousands of dollars from one county to the next. Before you fall for a price range, look up the current limit for the specific county where you are buying, because this calculator will happily run numbers on a loan FHA will not insure in that county. A few more rules belong on your checklist. FHA debt-to-income guidelines are more forgiving than conventional ones, and borrowers with strong compensating factors — cash reserves, minimal payment increase, documented extra income — are routinely approved at ratios that would fail a conventional application, but lender overlays still apply. Gift funds from family can cover some or all of the down payment when documented with a gift letter. Seller concessions toward your closing costs are permitted within FHA caps. And FHA loans are assumable: a future buyer who qualifies can take over your loan and your rate, which can become a genuine selling point if you lock a low rate and rates later climb.

When FHA is the right tool, and when it is not.

Reach for FHA when your down payment savings are thin, when your credit history is bruised but your income is steady, or when a conventional quote prices its mortgage insurance like it expects you to fail. It is purpose-built for exactly that buyer, and millions of Americans own homes because it exists. Think twice when you can put 20 percent down (conventional skips insurance entirely), when you can reach 10 percent down and a strong credit score makes conventional PMI both cheaper and temporary, or when you are buying a condo — FHA financing requires the condo project itself to be approved or eligible, which narrows your options. Also weigh the property-condition appraisal: in competitive markets, sellers sometimes prefer conventional offers precisely because FHA appraisals can demand repairs before closing. None of this argues against FHA in general; it argues for comparing two real loan estimates side by side, with this calculator's breakdown of MIP in front of you, instead of choosing a loan on its down payment alone.

How to use this calculator well.

Enter the home price and the down payment you can truly afford after keeping a cash reserve — an empty savings account plus a new roof is how FHA buyers get in trouble. Enter the rate from an actual loan estimate, not a headline rate from an advertisement, and set the term honestly; FHA allows shorter terms, and the 15-year version carries a lower annual MIP rate and a fraction of the lifetime interest. Confirm the annual MIP field matches your tier — 0.55 percent for the standard 30-year minimum-down loan, 0.50 percent at 5 percent down or more on a 30-year term, lower still on 15-year terms. Then read the results in this order: total loan amount (notice the financed premium inside it), principal and interest, monthly MIP, and only then the total payment. Finally, run the comparison the lender hopes you skip: the same home at 10 percent down, and the same home on the conventional mortgage calculator. The loan with the lowest payment this month is not always the loan that costs the least over the years you will actually own it.

With the pre-filled defaults — Home Price $350,000, Down Payment $12,250, Interest Rate (APR) 6.5%, Loan Term 30 yrs, Upfront MIP Rate 1.75%, Annual MIP Rate 0.55%, Annual Property Tax $4,200, Annual Home Insurance $2,100 — the FHA Loan Calculator returns Down Payment 3.50%, Base Loan Amount (before MIP) $337,750.00, Upfront MIP (financed) $5,910.63, Total Loan Amount (with MIP financed) $343,660.63, Principal & Interest $2,172.17, Monthly MIP $154.80, Annual MIP (first year) $1,857.63, Monthly Property Tax $350.00, Monthly Insurance $175.00, Total Monthly Payment $2,851.97, Total Interest Paid $438,320.19, Total Cost (P&I + Down) $794,230.81. Change any input and those results update instantly, so you can see exactly how each number you enter moves the answer.