FHA Loan Calculator

An FHA loan is a home loan backed by insurance from the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development (HUD). The FHA does not lend money itself; it insures approved lenders against losses if a borrower defaults. That protection lets lenders accept smaller down payments and lower credit scores than they would on a conventional loan, which makes FHA loans popular with first-time buyers.

Mortgage Insurance Premiums

The cost of FHA insurance is paid by the borrower through mortgage insurance premiums (MIP), and it comes in two parts. The upfront premium is 1.75% of the base loan amount. It is due at closing but is almost always added to the loan, so the amount you borrow is slightly higher than the price minus your down payment. On the default $482,500 base loan it is $8,443.75.

The annual premium is quoted as a yearly percentage and paid in monthly installments with the mortgage. Its rate depends on the term, the loan amount and the loan-to-value ratio, as shown below. How long you pay it depends on your down payment: with less than 10% down, annual MIP lasts for the life of the loan; with 10% or more, it ends after 11 years. Unlike PMI on a conventional loan, it cannot be cancelled early by reaching 20% equity, so many borrowers refinance into a conventional loan once they have enough equity.

Loan = (Price − Down) × (1 + UFMIP) Monthly MIP = Base loan × annual MIP rate ÷ 12

Base loan

price minus down payment

UFMIP

upfront premium, 1.75% of the base loan, usually financed

Annual MIP

yearly premium rate from the table below, paid in monthly installments

Principal and interest are then calculated on the loan including the financed upfront premium with the standard amortization formula.

2026 FHA Annual MIP Rates

These annual premiums have applied to FHA case numbers assigned since March 20, 2023, when HUD cut the rate for most borrowers to 0.55%. They remain HUD's schedule as of 2026 to our knowledge; check the latest mortgagee letter for changes.

Pros and Cons of FHA Loans

FHA loans make buying a home possible for many people who would struggle to qualify elsewhere, but the insurance makes them more expensive over time for borrowers with strong credit.

• Pro: low down payment of 3.5% with a credit score of 580 or higher.
• Pro: credit scores down to 500 are accepted with 10% down, and recent credit problems are treated more flexibly.
• Pro: higher debt-to-income ratios are often allowed than on conventional loans.
• Pro: down payment gifts from family, employers and approved assistance programs are permitted.
• Pro: FHA loans are assumable, so a buyer can take over your loan and its rate when you sell.
• Con: mortgage insurance is charged upfront and every year, often for the life of the loan.
• Con: loan amounts are capped by county limits set each year by HUD.
• Con: the home must be your primary residence and pass an FHA appraisal with minimum property standards.
• Con: with good credit and 5% or more down, a conventional loan with cancellable PMI may cost less.
• Con: some sellers in competitive markets prefer buyers using conventional financing.

Home Affordability

FHA underwriting focuses on two debt-to-income ratios. HUD's standard guidelines are 31% for housing costs (the mortgage payment including MIP, property tax, insurance and HOA dues) and 43% for all monthly debts, but higher ratios are frequently approved through automated underwriting when the borrower has compensating factors such as cash reserves or a strong credit history.

Loan amounts are limited by FHA county limits, which HUD updates every year based on local home prices. In 2025 the limit for a single-family home ranged from $524,225 in lower-cost areas to $1,209,750 in the most expensive markets. To get an FHA loan you will need:

• A credit score of at least 500, or 580 for the 3.5% minimum down payment.
• Steady, verifiable income, usually documented with two years of employment history.
• A property you will live in as your primary residence, normally moving in within 60 days of closing.
• A home that meets FHA minimum property standards, confirmed by an FHA-approved appraiser.

Prepayment

FHA loans have no prepayment penalty, so you can pay extra at any time to reduce interest and shorten the term. Use More options to add extra monthly, yearly or one-time payments. Paying down the loan faster also brings forward the point at which refinancing into a conventional loan to drop MIP becomes possible, and for loans with annual MIP set to end at 78% loan-to-value, it shortens the time you pay it.

FHA 203K Loans

The FHA 203(k) program lets you finance the purchase of a home and the cost of repairing or renovating it with a single mortgage, based on the home's projected value after the work is done. It is aimed at older or run-down properties that might not qualify for ordinary financing in their current state.

There are two versions. The Standard 203(k) covers major structural work, including room additions and foundation repairs, with a minimum of $5,000 in repairs, and requires a HUD consultant to oversee the project. The Limited 203(k) is for smaller, non-structural projects such as new kitchens, flooring, roofs, or energy efficiency upgrades; HUD raised its cap to $75,000 in 2024. Work must be done by licensed contractors, and funds are released in stages as it is completed.

203(k) loans follow the usual FHA rules on down payment, credit and mortgage insurance, but involve more paperwork and closing time. Get detailed contractor bids before you apply.

Frequently asked questions

Sources

• U.S. Department of Housing and Urban Development (FHA)
• CFPB – FHA loans