What an FHA loan costs each month
FHA loans are insured by the Federal Housing Administration, which lets lenders accept a smaller down payment and lower credit scores. In exchange you pay mortgage insurance premium (MIP) in two parts:
- Upfront MIP – 1.75% of the base loan amount. Most borrowers add it to the loan instead of paying cash.
- Annual MIP – a yearly percentage paid monthly. For most 30-year loans under $726,200 it is 0.55% (0.50% with at least 5% down). Larger loans and shorter terms use different rates.
The calculator adds principal and interest, monthly MIP, property tax and homeowners insurance to estimate your full payment.
FHA loan basics
- Down payment – 3.5% with a credit score of 580 or higher; 10% with a score of 500 to 579.
- How long MIP lasts – for the life of the loan with less than 10% down, or 11 years with 10% or more down.
- Loan limits – FHA sets a maximum loan amount for each county. Check HUD's FHA mortgage limits lookup.
- Primary home only – you must live in the home.
Frequently asked questions
How do I get rid of FHA mortgage insurance?
If MIP lasts for the life of the loan, the usual way out is refinancing into a conventional loan once you have about 20% equity, which then has no mortgage insurance.
Is an FHA loan better than a conventional loan?
FHA is often better with a lower credit score or small down payment. With good credit, a conventional loan with 3% to 5% down may cost less because private mortgage insurance can be removed later.
Can I use gift money for an FHA down payment?
Yes. FHA allows the down payment to come from a gift from family, an employer or an approved assistance program, documented with a gift letter.