Calculate FHA mortgage payments including upfront and annual mortgage insurance premiums (MIP). Compare FHA loans with conventional mortgages and understand all associated costs.
FHA loans are mortgages insured by the Federal Housing Administration, making homeownership accessible to borrowers who might not qualify for conventional loans. The FHA's mission is to expand homeownership opportunities, especially for first-time buyers and those with limited savings or lower credit scores.
The key feature that makes FHA loans unique is the mortgage insurance premium (MIP) system, which protects lenders from losses while enabling borrowers to purchase homes with minimal down payments. Understanding MIP costs is crucial for accurate budgeting and loan comparison.
| Requirement | FHA Minimum | Conventional Typical |
|---|---|---|
| Down Payment | 3.5% | 20% (5% minimum) |
| Credit Score | 580 (3.5% down) | 620-640 |
| Credit Score | 500 (10% down) | - |
| Debt-to-Income | Up to 57% | 28%/36% |
| Mortgage Insurance | Required (MIP) | Required if < 20% down (PMI) |
Paid at closing or financed into the loan
Varies by loan term, amount, and LTV ratio
| Loan Term: More than 15 Years | ||
|---|---|---|
| Loan Amount | LTV Ratio | Annual MIP |
| ≤ $726,200 | ≤ 95% | 0.50% |
| ≤ $726,200 | > 95% | 0.55% |
| > $726,200 | ≤ 95% | 0.70% |
| > $726,200 | > 95% | 0.75% |
| Loan Term: 15 Years or Less | ||
|---|---|---|
| Loan Amount | LTV Ratio | Annual MIP |
| ≤ $726,200 | ≤ 90% | 0.15% |
| ≤ $726,200 | > 90% | 0.40% |
| > $726,200 | ≤ 78% | 0.15% |
| > $726,200 | 78-90% | 0.40% |
| > $726,200 | > 90% | 0.65% |
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Best For | First-time buyers, lower credit | Strong credit, 20% down |
| Down Payment | 3.5% minimum | 3-20% |
| Interest Rates | Competitive | Often lower with good credit |
| Mortgage Insurance | MIP (usually permanent) | PMI (removable at 78% LTV) |
| Loan Limits | Varies by area (lower) | Varies by area (higher) |
| Property Requirements | Must meet FHA standards | Standard appraisal |
| Area Type | Single-Family Limit | Examples |
|---|---|---|
| Low-Cost Areas | $498,257 | Rural areas, small towns |
| Standard Areas | $766,550 | Most metropolitan areas |
| High-Cost Areas | Up to $1,149,825 | San Francisco, NYC, DC |
| Special Areas | Varies | Alaska, Hawaii, territories |
| Credit Score Range | Down Payment Required | Typical Interest Rate Impact |
|---|---|---|
| 580-619 | 3.5% | Higher rates |
| 620-679 | 3.5% | Standard rates |
| 680-739 | 3.5% | Good rates |
| 740+ | 3.5% | Best rates |
| 500-579 | 10% | Higher rates |
Front-End Ratio: Housing expenses ÷ gross monthly income ≤ 31%
Back-End Ratio: Total monthly debts ÷ gross monthly income ≤ 43%
Special Circumstances: Up to 57% back-end ratio with compensating factors
Primary Residence: Must be borrower's primary residence (no investment properties)
Property Standards: Must meet FHA health and safety standards
Appraisal: FHA-approved appraiser required
Condition: Property must be move-in ready
| Cost Type | Typical Amount | Who Pays |
|---|---|---|
| Upfront MIP | 1.75% of loan | Borrower (can finance) |
| Loan Origination | 0.5-1% of loan | Borrower |
| FHA Appraisal | $400-$800 | Borrower |
| Title Insurance | 0.5-1% of loan | Varies by state |
| Recording Fees | $50-$500 | Borrower |
Choose FHA When: Credit score below 640, down payment less than 10%, debt-to-income ratio above 36%, first-time homebuyer with limited savings
Choose Conventional When: Credit score above 680, down payment 20% or more, want to avoid mortgage insurance, buying investment property