FHA Loan Calculator
$
3.50%
6.50%
Monthly Payment$2,326.97
Monthly MIP$154.80
Upfront MIP$5,910.63
Total Interest$499,959.56
total cost$837.7K
Principal$337,750.00
Interest$438,320.93
MIP (Total)$61,638.63
FHA loans are government-backed mortgages that allow down payments as low as 3.5 percent, but they carry mandatory mortgage insurance premiums (MIP). This calculator adds the 1.75 percent upfront MIP into the financed balance, layers an annual MIP that depends on your term and loan-to-value ratio, and combines everything into a realistic monthly payment. The result reflects the true cost of an FHA loan, not just principal and interest.
Formula
Financed = base + base × 1.75%; Monthly = P&I(financed) + (base × annualMIP) ÷ 12
- base
- Base loan = home price − down payment
- 1.75%
- Upfront MIP rate added to the financed balance
- annualMIP
- Annual MIP rate (0.15%-0.55%) chosen by term and LTV
- P&I
- Principal-and-interest payment on the financed balance
How it works
- Enter the home price, down payment percentage (the FHA minimum of 3.5 percent is enforced), interest rate, and term. The base loan equals price minus down payment.
- The upfront MIP of 1.75 percent of the base loan is financed by adding it to the principal, so you pay interest on it across the term.
- An annual MIP is selected from the LTV and term: 0.55 percent for high-LTV 30-year loans down to 0.15 percent for low-LTV short terms. One-twelfth of it is added to each monthly principal-and-interest payment.
Worked example
A $300,000 home with the minimum 3.5% down at a 6.5% rate over 30 years.
- Down payment: 300,000 × 3.5% = $10,500, so the base loan is $289,500.
- Upfront MIP: 289,500 × 1.75% = $5,066.25, making the financed loan $294,566.25.
- LTV is 96.5% on a 30-year term, so annual MIP is 0.55%: monthly MIP = (289,500 × 0.0055) ÷ 12 = $132.69.
- P&I on $294,566.25 at 6.5% for 30 years is about $1,861.86, so total monthly = 1,861.86 + 132.69 = $1,994.55.
Monthly payment about $1,994.55 (including $132.69 MIP), with $5,066.25 financed upfront MIP and roughly $428,537 total interest over the loan.
Frequently asked questions
- What is the difference between upfront and annual MIP?
- Upfront MIP is a one-time 1.75 percent premium on the base loan, added to the balance and financed over the term. Annual MIP is an ongoing charge between 0.15 and 0.55 percent of the loan, collected monthly as one-twelfth of the annual amount.
- Why does the annual MIP rate change?
- The FHA sets the annual MIP rate by loan term and loan-to-value ratio. Longer terms and higher LTVs carry more risk and a higher rate, while shorter terms with more equity qualify for a lower rate, which this calculator selects automatically.
- How is an FHA loan different from a conventional mortgage?
- FHA loans permit lower down payments and credit scores but require both upfront and annual mortgage insurance regardless of down payment. Conventional loans charge PMI only below 20 percent down and let you cancel it once you reach 20 percent equity.
- Can FHA mortgage insurance be removed?
- For most FHA loans originated with under 10 percent down, annual MIP lasts the life of the loan. With 10 percent or more down it can end after 11 years. Many borrowers refinance into a conventional loan to drop MIP entirely.