FHA Loan Calculator Formula

Understand the math behind the fha loan calculator. Each variable explained with a worked example.

Use the FHA Loan Calculator

Formulas Used

Total Monthly Payment (P&I + MIP)

total_monthly = monthly_pi + monthly_mip

Monthly P&I

pi_payment = monthly_pi

Monthly MIP

mip_payment = monthly_mip

Upfront MIP (financed)

ufmip_cost = ufmip

Total Loan (with UFMIP)

total_loan_amount = total_loan

Down Payment Amount

down_payment_amt = down_payment

Variables

VariableDescriptionDefault
home_priceHome Purchase Price(USD)300000
down_payment_pctDown Payment(%)3.5
interest_rateInterest Rate(%)6.5
loan_term_yearsLoan Term(years)30
annual_mip_rateAnnual MIP Rate(%)0.55
down_paymentDerived value= home_price * down_payment_pct / 100calculated
base_loanDerived value= home_price - down_paymentcalculated
ufmipDerived value= base_loan * 0.0175calculated
total_loanDerived value= base_loan + ufmipcalculated
rDerived value= interest_rate / 100 / 12calculated
nDerived value= loan_term_years * 12calculated
monthly_piDerived value= r > 0 ? total_loan * r * pow(1 + r, n) / (pow(1 + r, n) - 1) : total_loan / ncalculated
monthly_mipDerived value= base_loan * annual_mip_rate / 100 / 12calculated

How It Works

FHA Loan Overview

FHA loans are government-insured mortgages designed for borrowers with lower credit scores or smaller down payments.

FHA Mortgage Insurance

  • Upfront MIP (UFMIP): 1.75% of the base loan amount, typically financed into the loan
  • Annual MIP: 0.15% to 1.05% depending on loan term, LTV, and loan amount, paid monthly

    • Key FHA Features

  • Minimum 3.5% down payment (credit score 580+)
  • Minimum 10% down (credit score 500-579)
  • More lenient debt-to-income requirements
  • MIP required for the life of the loan if down payment is under 10%
  • MIP drops after 11 years if down payment is 10% or more

    • Worked Example

    A $300,000 home with 3.5% down, 6.5% rate, 30-year term, 0.55% annual MIP.

    home_price = 300000down_payment_pct = 3.5interest_rate = 6.5loan_term_years = 30annual_mip_rate = 0.55
    1. 01Down payment: $300,000 x 3.5% = $10,500
    2. 02Base loan: $300,000 - $10,500 = $289,500
    3. 03UFMIP: $289,500 x 1.75% = $5,066
    4. 04Total loan: $289,500 + $5,066 = $294,566
    5. 05Monthly P&I: $294,566 over 360 months at 6.5% = $1,862.25
    6. 06Monthly MIP: $289,500 x 0.55% / 12 = $132.69
    7. 07Total monthly: $1,862.25 + $132.69 = $1,994.94

    Frequently Asked Questions

    Can I remove FHA mortgage insurance?

    If your down payment was less than 10%, annual MIP is required for the entire loan term. If you put 10% or more down, MIP drops off after 11 years. The only way to eliminate MIP on a low-down-payment FHA loan is to refinance into a conventional loan once you have 20% equity.

    What are FHA loan limits?

    FHA loan limits vary by county and are updated annually. In 2025, the floor limit is $498,257 for single-family homes in low-cost areas, and the ceiling is $1,149,825 in high-cost areas. Check HUD website for your county.

    How does an FHA loan compare to conventional?

    FHA loans are easier to qualify for with lower credit scores and smaller down payments, but they require upfront and annual MIP that can be more expensive than conventional PMI over time. Conventional loans drop PMI at 80% LTV; FHA MIP can last the loan life.

    Ready to run the numbers?

    Open FHA Loan Calculator