FHA loan calculator

Our calculator shows your estimated total monthly FHA loan payment as well as the breakdown of what you’ll pay with your monthly mortgage bill. There are three main parts to your monthly payment:

• Principal and interest

  Principal is the amount of money you borrow to buy your home. Interest is the cost you pay your lender to borrow this money. In the early years of your loan, most of your payment will go toward paying interest. In the later years of your loan, most of the payment will go to paying down your principal. These are typically the largest part of your FHA mortgage payment.

• MIP (Mortgage Insurance Premiums)

  All FHA loans require you to pay mortgage insurance premiums (MIP) as part of your monthly bill. The cost of MIP is affected by your loan amount, term, and other factors. Learn more about mortgage insurance premiums for FHA loans.

• Property taxes and homeowners insurance

  You’ll also be required to make payments each month toward the yearly cost of your property taxes and homeowners insurance when you buy a home with an FHA loan. These are sometimes called escrow payments because the money is kept in an escrow account until the taxes and insurance come due and are paid by the lender from this account.

Change the values for purchase price, down payment, term, and interest rate to see how they can affect our FHA calculator’s payment estimate. Keep in mind that FHA loans have a minimum down payment of 3.5% and that changing the loan’s term can significantly change your estimated monthly payment.

The purchase price of the home is the biggest single factor affecting the calculator’s estimate. Buying a house at an affordable price can keep your monthly payments affordable. Making a larger down payment can lower the cost of your monthly payments, because you are borrowing less money to buy a house. Shopping for the right homeowners insurance can help lower your payments. Finally, researching the cost of property taxes in communities where you want to buy a home, and choosing communities where the tax rate is lower, might help make your FHA payment more affordable.

The interest rate you pay is influenced by market trends and other factors. Having a high credit score and a low debt-to-income ratio (DTI) might help you earn a lower rate from lenders.

You can also use our FHA loan calculator to help you estimate the price of houses you can afford. To do this you just need to look at the cost of your estimated monthly mortgage bill plus other payments you might have for things like car loans, student loans, or credit cards.

When you buy a home with an FHA loan, you want to make sure you can afford all your monthly bills including your mortgage payment. Lenders like Freedom Mortgage will consider your total monthly debt payments too before we approve your application for an FHA loan.

We typically do this by calculating your debt-to-income ratio (DTI). Let’s look at a sample calculation. Say you want to get an FHA loan with a monthly payment of $1,500. Then say you have car loan and student loan payments that cost another $1,000 a month. This will make your total monthly debt payments $2,500.

Now pretend your monthly gross income is $6,250 which works out to $75,000 a year. To get your debt-to-income ratio, divide your $2,500 monthly debt payments by your $6,250 monthly income and get 40% DTI. (That is $2,500 ÷ $6,250 = 0.40 or 40%.)

This percentage is important to know because FHA loans often have a maximum DTI of 43%. That means your debt-to-income ratio has to be 43% or lower to get your FHA loan approved. Debt-to-income ratio can also help you make sure your FHA loan payments are affordable with your overall monthly budget.

¹ Inside Mortgage Finance, Jan-Mar 2021