FHA Calculator

An FHA loan is a mortgage insured by the Federal Housing Administration (FHA), a government agency established in 1934. FHA loans are designed to help lower-income and first-time homebuyers who may have difficulty qualifying for Conventional loans. 

Since the FHA insures these loans, lenders take on less risk. That means they can offer borrowers more flexible qualifying criteria, such as lower down payments and credit score requirements.

To pay for the loans, the FHA charges a single upfront mortgage insurance payment (MIP) along with annual mortgage insurance premiums. The mortgage insurance payments from borrowers are mandatory to protect lenders from losses in case the borrower stops making monthly loan payments. 

The upfront MIP is 1.75% of the loan amount and can be rolled directly into the mortgage, so the buyer often isn’t required to bring that money to the closing table. The annual MIP varies based on loan term, loan amount, and loan-to-value (LTV) ratio (which is how much your loan is compared to the property’s value).

Understanding FHA Mortgage Insurance Premiums (MIP)

FHA loans require two types of mortgage insurance premiums.

The upfront MIP is a one-time fee equal to 1.75% of the base loan amount. This can be paid at closing or rolled into the total loan amount.

The annual MIP is paid monthly as part of your mortgage payment. The amount depends on your loan term, loan amount, and loan-to-value ratio.

If your down payment is 10% or more (LTV equal to or higher than 90%), you may be eligible to cancel the annual MIP after 11 years. If you put down less than 10% when you purchased the home, the annual MIP remains in effect for the life of the loan.

This is different from conventional private mortgage insurance (PMI), which automatically cancels once you reach 20% equity.

How to Use the FHA Loan Calculator

To use the FHA loan calculator, enter your home price and down payment to set the base loan amount. Then type in the mortgage interest rate you’ve been quoted (or estimated), the expected length of your loan, and verify the FHA MIP rates.

You can also add property taxes, home insurance, homeowner association (HOA) fees, and other recurring costs for a more complete picture of your total monthly housing expenses.

Once you click Calculate, you’ll see your estimated monthly payment broken down, along with a full amortization schedule.

Types of FHA Loans

FHA 203(b) Standard Purchase Loan

The FHA 203(b) loan is the most common type of FHA loan and is designed for borrowers looking to purchase or refinance a primary residence. It allows down payments as low as 3.5% for borrowers with a credit score of 580 or higher. That makes homeownership more accessible for first-time buyers and those with limited savings.

This loan can be used to finance single-family homes, multi-unit properties (up to four units), condos, and manufactured homes that meet FHA guidelines.

FHA 203(k) Rehabilitation Loan

The FHA 203(k) loan is a renovation loan that lets buyers finance both the purchase of a home and the cost of repairs or improvements in a single mortgage.

There are two versions: the Standard 203(k) for major structural renovations and the Limited 203(k) for smaller projects under $35,000. This loan is ideal for buyers interested in fixer-upper properties who want to avoid taking out a separate home improvement loan.

FHA Home Equity Conversion Mortgage (HECM)

The FHA Home Equity Conversion Mortgage, commonly known as a reverse mortgage, is available to homeowners aged 62 and older who want to convert a portion of their home equity into cash.

Unlike a traditional mortgage, no monthly mortgage payments are required. The loan must be repaid when the borrower sells the home, moves out, or passes away. The HECM is federally insured and can be received as a lump sum, monthly payments, or a line of credit. This offers older homeowners another way to supplement their retirement income.

FAQs

What is the minimum down payment for an FHA loan?

The minimum down payment for an FHA loan is 3.5% of the sale price of the home if your credit score is 580 or higher. If your credit score is between 500 and 579, you'll need a minimum down payment of 10%. For a $425,000 home, a 3.5% down payment equals $14,875.

How long must I pay FHA mortgage insurance (MIP)?

If your down payment is less than 10%, you pay the annual MIP for the life of the loan. If your down payment is 10% or more, you may be able to cancel the annual MIP after 11 years. This is the key difference from PMI on Conventional loans, where the mortgage insurance may be dropped when you reach 20% equity.

Can the FHA upfront MIP be rolled into the loan?

Yes. The upfront MIP of 1.75% of the FHA loan amount can be financed directly into your mortgage rather than paid out of pocket at closing. This is why the loan amount in the calculator includes the upfront MIP. It increases your total mortgage balance slightly.

What credit score do I need for an FHA loan?

The FHA requires a minimum credit score of 500. However, with a score of 580 or higher, you may qualify for the minimum 3.5% down payment.

What are the FHA loan limits for 2026?

FHA loan limits vary by county and are updated annually by the U.S. Department of Housing and Urban Development (HUD). For 2026, the standard single-family home FHA loan limit is $541,287 in lower-cost areas. It rises to approximately $1,249,125 in high-cost areas. FHA loan limits are subject to change. Contact a New American Funding loan officer to confirm the exact limits in your area.

Is an FHA loan better than a Conventional loan?

It depends on your financial situation. FHA loans are great for buyers with lower credit scores or limited funds for a down payment. Conventional loans may offer lower overall costs if you have higher credit and can put down at least 20%. That’s because PMI on Conventional loans may be canceled when you reach 20% equity in your home.