What is an FHA loan?
An FHA loan is a mortgage insured by the Federal Housing Administration. Because the government insures the lender against loss, FHA loans accept lower credit scores and smaller down payments than most conventional loans: as little as 3.5% down with a credit score of 580 or higher, or 10% down with a score from 500 to 579. They are popular with first-time buyers.
In exchange, every FHA borrower pays mortgage insurance premiums (MIP). This FHA loan calculator adds them to the payment: the upfront MIP is added to the loan amount, and the annual MIP is charged every month on top of principal and interest. Turn on the optional costs to see the full monthly cost with property tax, insurance, HOA fees and other costs. For a conventional loan with PMI instead, use the mortgage calculator.
How the FHA payment is calculated
- Base loan = home price − down payment;
- Upfront MIP = base loan × 1.75%, added to the loan;
- Principal and interest M = P × r × (1 + r)n / ((1 + r)n − 1), where P is the loan with the upfront MIP, r the monthly rate and n the number of payments;
- Monthly MIP = base loan × annual MIP rate / 12.
Example: a $500,000 home with 3.5% down leaves a base loan of $482,500. The upfront MIP of $8,443.75 is added, so you borrow $490,943.75. At 6.9% for 30 years, principal and interest come to $3,233.36 a month, and the annual MIP of 0.55% adds $221.15 a month, for a total of $3,454.50. With property tax of 1.2%, insurance of $2,500 a year and $5,000 of other yearly costs, the full monthly cost is about $4,580.
The calculator keeps the annual MIP at its first-year amount. Lenders recalculate it each year from the average loan balance, so the real premium falls slowly over time.
FHA MIP rates
The annual MIP depends on the loan term and the down payment. For a base loan of $726,200 or less:
| Loan term | Down payment | Annual MIP | Paid for |
|---|---|---|---|
| Over 15 years | Under 5% | 0.55% | Loan term |
| Over 15 years | 5% to under 10% | 0.50% | Loan term |
| Over 15 years | 10% or more | 0.50% | 11 years |
| 15 years or less | Under 10% | 0.40% | Loan term |
| 15 years or less | 10% or more | 0.15% | 11 years |
- Upfront MIP is 1.75% of the base loan for all of these loans.
- Larger loans, above $726,200, pay 0.70% or 0.75% a year on terms over 15 years.
- The rates come from HUD Mortgagee Letter 2023-05, which cut the most common rate from 0.85% to 0.55%.
FHA payment by home price
The table uses 3.5% down, a 30-year loan at 6.9%, 1.75% upfront MIP and 0.55% annual MIP. Property tax and insurance come on top.
| Home price | Loan with upfront MIP | Principal & interest | Monthly MIP | Total |
|---|---|---|---|---|
| $250,000 | $245,472 | $1,617 | $111 | $1,727 |
| $300,000 | $294,566 | $1,940 | $133 | $2,073 |
| $350,000 | $343,661 | $2,263 | $155 | $2,418 |
| $400,000 | $392,755 | $2,587 | $177 | $2,764 |
| $450,000 | $441,849 | $2,910 | $199 | $3,109 |
| $500,000 | $490,944 | $3,233 | $221 | $3,455 |
Why 10% down changes the cost of MIP
With less than 10% down, the annual MIP lasts for the whole loan. On the $500,000 home above, 3.5% down means about $79,613 of annual MIP over 30 years. With 10% down, the rate drops to 0.50% and stops after 11 years, for a total of about $24,750. The down payment calculator shows how much cash each option needs.
FHA loan requirements
- a credit score of at least 580 for 3.5% down, or 500 with 10% down;
- a debt-to-income ratio usually up to 43%, sometimes higher with strong credit or savings — check yours with the DTI calculator;
- the home must be your main residence and pass an FHA appraisal;
- the loan must fit the FHA limit for your county: in 2026, from $541,287 to $1,249,125 for a one-unit home.
To see what price fits your income under FHA limits, choose the FHA option in the house affordability calculator.
FHA vs. conventional loan
- Down payment: FHA from 3.5%, conventional from 3%.
- Credit score: FHA accepts scores from 500 or 580; conventional loans usually need at least 620.
- Mortgage insurance: FHA charges upfront and annual MIP; conventional PMI applies only below 20% down and ends once you reach 20% to 22% equity.
- Best for: FHA often wins with a lower credit score; with good credit and 5% or more down, a conventional loan is often cheaper over time.
How to stop paying FHA mortgage insurance
With 10% or more down, the annual MIP ends on its own after 11 years. With less, it lasts until the loan is paid off, and the usual way out is to refinance into a conventional loan once you have about 20% equity. The refinance calculator shows whether the new loan pays for its closing costs, and the mortgage payoff calculator shows how extra payments build equity faster.
If you are an eligible veteran or service member, compare with the VA mortgage calculator: VA loans need no down payment and no monthly mortgage insurance.