Skip to content
CalcMyWay

FHA Loan Calculator

Your details

$
%
%
%
%
Advanced options
%
$

Result

Total monthly payment

$2,489
Principal and interest
$1,935
Monthly mortgage insurance
$144
How long MIP lasts
Life of the loan (30 years) — LTV above 90%
Total financed
$314,204
Upfront MIP
$5,404
Loan-to-value
96.50%
Total MIP over the loan
$57,248
Tax and insurance
$410
  • At 96.5% LTV the annual premium runs for the entire life of the loan — it never cancels, no matter how much equity you build. Over 30 years that is $51,844 in annual premiums alone, plus the $5,404 upfront. Putting 10% down instead would limit it to 11 years. This is the most consequential fact about FHA financing and the one most calculators leave out.
  • The $5,404 upfront premium is financed, so you pay interest on it too — about $6,574 over 30 years, bringing its real cost to $11,978. Paying it in cash at closing avoids that entirely.
  • The only way out of FHA mortgage insurance once you are above 90% LTV is to refinance into a conventional loan, which requires 20% equity to avoid PMI. That is worth planning for rather than discovering later — and it is why FHA is best understood as a way in, not a loan to hold for 30 years.

What the down payment changes

The 10% threshold is the one that matters — it is where the annual premium stops running for the life of the loan.

Down paymentMonthly paymentMIP lastsTotal MIP
3.5% (yours)$2,489Life of loan$57,248
5%$2,456Life of loan$56,358
10%$2,34911 years$22,769
15%$2,24111 years$21,504
20%$2,13311 years$20,239

How is an FHA loan payment calculated?

An FHA payment is principal and interest on the loan including the financed upfront premium, plus monthly mortgage insurance, plus escrowed tax and insurance. On a $320,000 home with 3.5% down at 6.25%, that is $1,935 principal and interest plus $144 of mortgage insurance.

financed = (price − down) × (1 + UFMIP rate) monthly MIP = financed × annual MIP rate ÷ 12
UFMIP
One-time upfront premium, currently 1.75% of the base loan
annual MIP
Yearly premium charged on the balance, paid monthly
90% LTV
The threshold above which the annual premium never cancels

An FHA loan carries two separate mortgage insurance premiums, and understanding both is the whole point of running this calculation rather than a standard mortgage one. The upfront premium is 1.75% of the base loan, and it is almost always financed rather than paid in cash — which means it increases the loan balance and you pay thirty years of interest on it. On a $320,000 purchase that premium is $5,404, and financing it adds roughly $6,500 in interest on top. The annual premium is charged on the balance and collected monthly. The rate matters less than its duration, because above 90% loan-to-value it runs for the entire life of the loan. It does not cancel at 20% equity, or at 50%, or ever. Conventional PMI cancels automatically at 78% LTV by law; FHA mortgage insurance above 90% LTV does not cancel at all, and the only exit is refinancing into a conventional loan. That makes the 10% down payment threshold the most consequential number here: it is the difference between 11 years of premiums and thirty. FHA is best understood as a way into a house, not a loan to hold to term.

  1. Subtract the down payment from the price for the base loan.
  2. Multiply the base loan by the upfront premium rate.
  3. Add that premium to the base loan if you are financing it.
  4. Amortise the total over the term for principal and interest.
  5. Multiply the loan by the annual premium rate and divide by 12.
  6. Add escrowed property tax and home insurance.

Worked example: A $320,000 home with 3.5% down at 6.25% over 30 years, premiums financed

A $320,000 home with 3.5% down at 6.25% over 30 years, premiums financed

A 3.5% down payment on $320,000 is $11,200, leaving a base loan of $308,800. The upfront premium of 1.75% adds $5,404, which financed brings the total loan to $314,204 — so you are borrowing more than the house is worth minus your deposit, before a single payment. Principal and interest on that at 6.25% over 30 years is $1,934.61. The annual premium of 0.55% on $314,204 is $1,728.12 a year, or $144.01 a month. Adding escrowed property tax of $293.33 and insurance of $116.67 gives a total monthly payment of $2,488.62. The figure that matters most is not on the payment line: at 96.5% LTV the annual premium runs for the entire life of the loan, so that $144.01 continues for all 360 payments — $51,844 in total, plus the $5,404 upfront. Putting 10% down instead would cap it at 11 years.

What each fha loan input means

Purchase price
The agreed price, or the appraised value if lower — FHA lends against the lesser of the two.
Down payment
FHA's minimum is 3.5% with a credit score of 580 or above, or 10% below that. Reaching 10% shortens the annual premium to 11 years instead of the loan's life.
Interest rate
The note rate. FHA rates are often slightly below conventional for the same borrower.
Loan term
Thirty years is standard. A 15-year term has a lower annual premium rate.
Upfront MIP
A one-time premium of the base loan amount, currently 1.75%. Almost always financed into the loan rather than paid in cash — which means you pay interest on it for 30 years.
Annual MIP
Charged yearly on the loan balance and paid monthly. HUD revises these rates by mortgagee letter, so confirm the current figure for your loan size and LTV.
Property tax rate
Annual tax as a percentage of value, escrowed monthly.
Annual home insurance
Hazard insurance, also escrowed monthly.
Finance the upfront premium
Rolling it into the loan avoids paying cash but adds to the balance and to the interest. Turning this off shows the cash-paid alternative.

What this fha loan does not account for

  • Above 90% LTV the annual premium never cancels. It is not removed at 20% equity or at any other point — only refinancing into a conventional loan ends it.
  • The upfront premium is usually financed, so you pay interest on it for the full term. On a typical loan that roughly doubles its real cost.
  • HUD revises premium rates by mortgagee letter, and they vary by loan size, term and LTV. Confirm the current figures rather than relying on defaults.
  • FHA loans have county-level limits on the amount you can borrow, which vary widely and are revised annually.
  • The property must meet FHA minimum property standards and be appraised by an FHA-approved appraiser. Some homes in poor condition will not qualify.
  • FHA is for a primary residence. Investment properties and most second homes are not eligible.
  • Conventional PMI cancels automatically at 78% LTV by law and can be requested at 80%. That asymmetry is the main long-run cost difference between the two routes.
  • A 15-year FHA loan has a lower annual premium rate, and at 90% LTV or below the premium duration is shorter still.

Frequently asked questions

Does FHA mortgage insurance ever go away?

Only if your original loan-to-value was 90% or below, in which case it ends after 11 years. Above 90% it runs for the life of the loan, and the only exit is a conventional refinance.

How much is FHA mortgage insurance?

An upfront premium of 1.75% of the base loan, usually financed, plus an annual premium around 0.55% charged monthly. On a $314,204 loan that is $5,404 upfront and about $144 a month.

What is the minimum down payment for an FHA loan?

3.5% with a credit score of 580 or above, or 10% below that. Reaching 10% also shortens the annual premium from the life of the loan to 11 years.

Is an FHA loan cheaper than conventional?

Often cheaper to get into and more forgiving on credit, but more expensive to hold. Conventional PMI cancels at 78% LTV by law, while FHA insurance above 90% LTV does not cancel at all.

Should I pay the upfront MIP in cash?

If you can, yes. Financing it adds the premium to the balance and you pay interest on it for the whole term, which on a 30-year loan roughly doubles what it costs you.

Can I refinance out of an FHA loan?

Yes, and for many borrowers that is the plan. A conventional refinance at 20% equity removes mortgage insurance entirely, though it depends on rates at the time and qualifying again.

Sources and review

Last reviewed .