Loan Types / FHA

FHA Loan Calculator

FHA loans help buyers with a lower down payment or a building credit profile. Estimate your payment including the upfront and annual mortgage insurance premium.

How FHA loans work

An FHA loan is insured by the Federal Housing Administration, so lenders can accept lower credit and a smaller down payment.

• Down payment: as low as 3.5% with a qualifying score.
• Mortgage insurance: 1.75% upfront (usually financed) plus about 0.55% per year.
• Credit: more flexible than conventional.
• MIP length: lasts the life of the loan when you put under 10% down, otherwise about 11 years.

Who FHA tends to fit

Buyers with a smaller down payment, a credit score still on the rise, or a higher debt-to-income ratio often qualify for FHA when conventional does not. The trade-off is ongoing mortgage insurance.

FHA vs conventional

If your credit is strong and you can reach 20% down, conventional usually costs less because you skip PMI. If not, FHA may be the path in. The calculator shows both.

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FHA mortgage insurance: MIP, not PMI

FHA loans carry mortgage insurance, but it is not the same product as conventional PMI, and the two behave differently in ways that change the long-run cost.

Two consequences follow. First, MIP does not care about your credit score, which is why FHA often wins on total payment for lower-score borrowers and loses to conventional for higher-score borrowers even at a similar rate. Second, MIP with the minimum down payment generally stays for the life of the loan, so removing it means refinancing rather than waiting for equity to build.

The up-front premium and your starting balance

The up-front premium is charged at closing and is almost always financed into the loan rather than paid in cash. On a $300,000 purchase with 3.5% down, the base loan is $289,500 and the financed premium pushes the starting balance above that. The payment estimate should be run on the higher figure, which is what an FHA-aware calculator does and a generic one does not.

Where FHA fits against conventional

FHA tends to fit when credit sits below the range where conventional pricing turns favorable, when the file has recent credit events, or when a higher DTI needs the flexibility FHA allows. Conventional tends to fit when the score is strong, because PMI prices down sharply with credit and can be cancelled at 20% equity.

A workable way to compare is to run both at the same purchase price and down payment, then look at the total monthly payment including insurance, and separately at what the payment becomes in year five — conventional drops when PMI comes off, FHA generally does not.

Frequently asked questions

How much down payment for FHA?

As little as 3.5% with a qualifying credit score. A larger down payment may be required at lower scores.

Does FHA have mortgage insurance?

Yes, an upfront premium of 1.75% plus an annual premium around 0.55% paid monthly. Under 10% down it generally lasts the life of the loan.

Is FHA only for first-time buyers?

No. Repeat buyers can use FHA too. It is popular with first-time buyers for its lower requirements.

How do I remove FHA mortgage insurance?

Often by refinancing into a conventional loan once you have enough equity. A loan officer can run the numbers.

Does an FHA loan have PMI?

FHA loans carry mortgage insurance premium, or MIP, rather than conventional PMI. MIP includes an up-front premium financed into the loan plus a monthly amount, and it is priced the same regardless of credit score.

Can FHA mortgage insurance be removed?

With the minimum down payment, MIP generally remains for the life of the loan. Borrowers typically remove it by refinancing into a conventional loan once they have enough equity, rather than by waiting.

Is FHA or conventional cheaper with PMI included?

It depends mainly on credit score. Conventional PMI prices down sharply with a strong score and cancels at 20% equity, while FHA MIP is score-neutral and usually permanent, so FHA often costs less for lower scores and more for higher ones.