FHA Mortgage Calculator - FHA MIP Calculator

This unique Federal Housing Administration (FHA) calculator accurately shows the costs of selecting an FHA-backed mortgage to finance your home. It uses the formula provided by Housing and Urban Development (HUD) to properly calculate FHA mortgage insurance premium costs over time. Unlike most traditional private mortgage insurance (PMI) policies, FHA uses an "amortized" premium structure, causing your MI costs to change over time as your loan balance declines.

Borrowers with small downpayments aren't limited to an FHA-backed mortgage. Fannie Mae and Freddie Mac have (almost) always backed low-downpayment mortgages called "Conventional 97s," where a borrower can place a downpayment as small as 3 percent. These are subject to risk-based pricing adjustments that can raise the cost, making them less useful to borrowers with limited funds and lower credit scores.

In recent years, Fannie Mae and Freddie Mac developed new products for low- and moderate-income buyers; HomeReady and Home Possible (HR/HP) programs feature low (or no) risk-based add-ons to the rate or fees the borrower must pay and also reduced PMI premiums.

Our calculator and low down-payment comparator enable you to compare these offerings on a side-by-side basis. You'll learn exactly how each of these choices could affect your housing costs during the time you expect to own your home.

How to use HSH's FHA mortgage calculator

Comparing low-downpayment-mortgage options is at the heart of this calculator. To start, add in the dollar amount of the home you hope to buy in the field for "purchase price." We supply a suggested interest rate for you, but if your rate is different, simply change it in the interest rate field.

Choose your downpayment from the dropdown. Using your downpayment percentage, the calculator returns the dollar amount you'll need, which is based on the purchase price you entered.

For FHA programs, financing the up-front mortgage insurance premium is common to help buyers conserve funds. If you prefer, you can pay the up-front MIP out-of-pocket for about 1.75% of the loan amount you are borrowing. In the dropdown, select "Yes" to finance it or "No" to pay it out-of-pocket.

For "product choice," please select among the five common options. Fixed-rate mortgages (FRMs) longer than 20 years should select "FRM 20.01+ yrs"; this includes costs for 30-year FRM. For FRMs with terms of 20 years or less, select "FRM 20.01- yrs". Three varieties of hybrid adjustable rate mortgages (ARMs) can also be selected, including those with 5-, 7- and 10- year fixed-rate periods. In each of the ARM options, the interest rate remains fixed for the initial loan period, say five (or seven or ten) years, then adjusts every year for the remainder of the 20-year loan period.

For "credit rating," choose a score "bucket" from the dropdown that is closest to the one you think applies to you. Although the FHA program does not use risk-based pricing that increases loan costs as your credit score declines, other low-downpayment choices in the market do, and it is these programs against which we compare costs for you. If your credit isn't so good, an FHA-backed mortgage might be your best option.

For "compare costs over what number of years?" indicate the period of time you expect to own your home. Use the incrementer at the end of the field to add or subtract years. As you do, note that the calculations presented to the right change as you add or subtract years.

Optionally, provide a guesstimate of what you think may happen to home values over the time period you entered in "compare costs over what number of years?" For low-downpayment mortgage products that require PMI, home price appreciation can speed up the time it takes to reach a point where you can cancel such a policy, trimming your monthly mortgage cost.

Once you've made your selections, costs for your FHA mortgage appear automatically on the right side of the screen.

Now, compare FHA costs against another popular choice in the market, "Conventional 97" (3% down) financing. In the box at the bottom, where it says "Want to compare FHA against other low downpayment mortgage options?" click "Yes."

Conventional 97 mortgages require just 3 percent down and are available with no special restrictions all across the country. However, low downpayment mortgages carry more risks to the lender, and higher risks can being higher costs, especially if a borrower has a less-than-perfect credit score. If your credit is good but your ability to save up a downpayment is limited, a Conventional 97 loan might be a good choice for you.

Unlike a low-downpayment FHA mortgage, Conventional 97s use traditional PMI policies; these can be canceled at a future time after the loan passes an 80% loan-to-value (LTV) ratio. This occurs at a future intersection of paying down the loan's outstanding balance and how quickly the value of your home rises. PMI cancellation could be as little as two years away.

Comparing HomeReady and Home Possible mortgages
Aimed at low-to-moderate income buyers or targeted to special geographic locations is easily accomplished on the website. HR/HP mortgages allow for just a 3 percent down payment but these loans have low or no risk-based premiums that drive up mortgage costs, so qualifying borrowers may find these as affordable as FHA-backed loans. Unlike the FHA program, though, HR and HP mortgages allow for PMI to be canceled at a future point, so mortgage costs might be lower in the future.

In addition to meeting income or geographic requirements, HR/HP borrowers must complete an approved homebuyer education course.

Purchase price
This is the dollar amount of the home you wish to buy.

Interest rate
The loan's interest rate. We provide the average conforming 30-year fixed-rate mortgage (FRM) interest rate as a starting point; this can be changed as needed. The interest rate is the main factor used by the mortgage payment calculator to determine what your monthly payment and costs will be over time.

Downpayment
For comparison purposes, the calculator allows four common choices of 3.5%, 5%, 10% and 15% down. The availability of a small downpayment is the hallmark of the FHA program, and when a borrower puts 20% down or more, PMI is not required for conventional mortgage offerings, so there would be nothing to compare an FHA loan against.

For convenience, we produce the downpayment dollar amount for you based on your purchase-price input.

Finance up-front MIP? (Mortgage insurance premium)
The FHA program requires payment of an up-front fee, currently 1.75% of the loan amount. However, to help keep out-of-pocket costs low, this amount can be financed as a part of the loan.

Product choice
Mortgage loans come in a range of terms. Fixed-rate mortgages are most often found in 30, 20, 15 and 10-year terms; adjustable rate mortgages usually have total terms of 30 years, but the fixed interest rate period is much shorter than that, lasting from 1 to 10 years. The dropdown here allows for a choice of FRMs with terms greater or less than 20 years, and three common hybrid ARM terms.

Credit rating
While the FHA program does not use risk-based pricing, which increases costs for borrowers with low credit score, low-downpayment programs that a borrower may also be interested in do use them. For a most accurate comparison, please choose a credit score "bucket" that is closest to the score you have.

Calculate costs over what number of years?
How long you do you expect to be in your home? Please choose a number of years so that we can calculate your mortgage insurance and loan costs over the time you expect to remain in your home.

Expected annual home price appreciation?
Along with amortization (the process of paying off your loan) what happens to home prices affects how quickly you may be able to cancel private mortgage insurance (PMI) for low-downpayment programs that are comparable to FHA. If you're not sure what may happen in the future, just leave the figure at 0; the calculation will provide the number of months when you should have paid down the loan to an amount that allows you to discuss canceling a PMI policy with your lender.