The FHA Loan Payment Calculator is a tool designed to estimate the total monthly mortgage obligation for Federal Housing Administration (FHA) loans. Unlike conventional mortgages, FHA loans require both an upfront mortgage insurance premium (which is typically financed into the loan) and an annual premium paid monthly. This calculator accurately accounts for these specific costs.

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Understanding FHA Mortgage Insurance (MIP)

One of the defining features of an FHA loan is the Mortgage Insurance Premium (MIP). Because FHA loans allow for lower credit scores and smaller down payments (as low as 3.5%), the Federal Housing Administration requires insurance to protect lenders against default. This insurance comes in two forms, both of which are calculated in this tool.

1. Upfront MIP (UFMIP)

The Upfront MIP is a one-time fee equal to 1.75% of the base loan amount. While it can be paid in cash at closing, most borrowers choose to finance it, meaning it is added to the loan balance. This increases the total amount of interest paid over the life of the loan.

2. Annual MIP

The Annual MIP is a recurring cost calculated as a percentage of the base loan amount. For most new FHA loans with a term greater than 15 years and a down payment less than 5%, the factor is currently 0.55% (55 basis points). This annual amount is divided by 12 and added to the monthly mortgage payment.

Calculation Formula

The calculation follows a specific sequence to account for the financing of the upfront premium:

Note: Conventional loans use Private Mortgage Insurance (PMI), which typically drops off once equity reaches 20%. In contrast, FHA MIP typically remains for the life of the loan if the down payment was less than 10%.

See Also

• Federal Estate Tax Calculator – Estimate estate tax liability.
• Universal Payment Calculator – Standard loan amortization.
• General Lease Payment Calculator – Equipment and business lease estimation.