First time homebuyers, more than any class of homeowners, tend to be cash poor. That’s not a judgement statement — we all start somewhere. However, compared to other loans, FHA is much more forgiving of your liquidity-related woes. Because of FHA’s low down payments and small reserve requirements, along with options to roll up-front mortgage insurance into the loan, many buyers find they can get into an FHA loan and onto the road to homeownership much more quickly than they can with traditional loan products.
Using the FHA Mortgage Calculator
This calculator allows you to compute the monthly/bi-weekly mortgage payment for your FHA mortgage loan, including the Upfront Mortgage Insurance Premium (UFMIP) and Annual Mortgage Insurance Premium (MIP). It also helps you understand the total cost of home ownership over the entire loan term, by taking into account one-time expenses (closing costs, home furnishing etc.) and recurring costs such as property taxes, homeowner’s insurance and HOA fees. Here are some important points that you should be aware of:
- FHA Loan limits vary nationwide for single-family, two-family, three-family and four-family properties. You should lookup county-level FHA loan limits for your State and enter the home value accordingly.
- Currently, FHA mandates a minimum 3.5% down payment towards your house. Historically, it has been 3%.
- FHA requires one-time UFMIP and recurring MIP (similar to Private Mortgage Insurance — PMI — with Conventional Loans) based on loan-to-value (LTV), your credit score, amortization period, refinance or purchase etc. The rules, to calculate the value and duration of MIPs, are complex and have changed over the years. This calculator assumes that the Upfront MIP is rolled into the mortgage. If you are attempting to calculate the mortgage payments for a FHA loan availed earlier, then you may have to override the defaults provided by the calculator.
- If you are planning to buy a Condo, you can lookup FHA Approved condos that meet FHA requirements.
Update: Annual Mortgage Insurance Premium (MIP) will be reduced 0.30 of a percentage point for new borrowers who take out FHA loans after 20th March 2023.
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