Guides FHA Loans 101

FHA Mortgage Calculator

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An FHA loan is a mortgage insured by the Federal Housing Administration. FHA loans require a smaller down payment, have lower closing costs and allow relaxed lending standards to help homeowners who don’t qualify for a conventional mortgage.

FHA loans allow a down payment of as little as 3.5% on a mortgage. This can make it possible for lower- and middle-income borrowers to buy a house when they don’t qualify for a conventional loan — which can have stricter requirements, including a higher credit score.

How we got here

Monthly payment: What’s behind the numbers in our FHA mortgage calculator

FHA home loans can be a big chunk of first-time homebuyers’ mortgages because the loans allow for lower down payments and relaxed credit qualifications. But like other programs administered by the government, FHA-backed mortgages are complicated.

And that’s where the NerdWallet FHA loan calculator comes into play.

To see an estimate of how much your monthly payment will be with an FHA home loan, plug in the numbers, and we’ll put all the moving parts together.

We consider the standard elements, like principal and interest. But we also factor in the taxes and insurance that will be wrapped into your monthly payment. This is a true PITI mortgage calculator — meaning principal, interest, taxes and insurance.

But most importantly, this FHA mortgage calculator includes the mortgage insurance premiums that will also be built into your payment. That’s a big factor when deciding to go with an FHA-insured mortgage. Mortgage insurance protects the lender from borrower defaults, so it’s an additional price you pay for a low-down-payment FHA mortgage. And it’s a cost that you want to consider carefully in your monthly home loan budget.

What an FHA loan calculator does

The NerdWallet FHA mortgage calculator answers the question you are most likely asking: “How much it will cost me to finance my home with an FHA mortgage?”

To find out, input:

  • The price you want to pay for a home

  • Your down payment

  • Your interest rate

  • Years of the loan term

Immediately, you’ll have a number. Then, you can dive down into as much detail as you like. You could simply consider your monthly payment and leave it at that. Or choose “Total” for a breakdown of costs and all the details: including FHA mortgage insurance — how much you’ll pay upfront, what the monthly premium will be and how long you’ll pay it.

Armed with a good idea of what you can afford and how much your monthly payment will be, you’ll be ready to shop for FHA lenders with the best mortgage rates.

How to use an FHA mortgage calculator

NerdWallet’s FHA loan calculator is an important tool when you are trying to determine that big question — “how much house can I afford?” With this calculator, you can run a number of “what-if” scenarios. For example, you may consider:

  • How long will I stay in this home? Is it a starter or your forever home? That will help determine whether you should consider a 30-year fixed rate FHA loan. The longer term will lower your monthly payment, but you’ll pay a lot more interest over the long term. A 15-year fixed-rate FHA mortgage will slash the total interest, but your monthly payment will be higher.

  • Is an adjustable-rate mortgage a better option for me? For example, a 5/1 FHA ARM will give you a lower initial interest rate that’s fixed for five years, then changes annually after that. It can be a good loan solution for home buyers who plan to stay in a home for just a few years.

  • Am I trying to buy too much house? The FHA mortgage calculator helps you gut-check your home-buying budget. Because it’s considering your all-in monthly payment costs, including FHA mortgage insurance premiums, you’ll be confident knowing you’re looking for the right house at the right price for your income.

  • How much of a down payment should I make? This is an important question, particularly for FHA loans. While FHA allows as little as 3.5% down, with a down payment of 10% or more, your mortgage insurance premiums will end after 11 years. Put down less, and you’ll be stuck with those premiums for the life of the FHA loan — and you’ll have to refinance into a conventional mortgage to cancel it.

FHA mortgage monthly payment 101

What are the monthly costs built into a monthly mortgage payment?

If you use an FHA mortgage payment calculator that includes only principal and interest, you’ll be getting a less-than-accurate result. And you’ll be set up for payment shock when you realize your actual payment will be higher.

The NerdWallet FHA loan calculator is a tool that considers the costs in real-life FHA monthly mortgage payments, including:

  • Principal. This is the amount you owe on the loan; what you borrowed minus your down payment. For example, if you buy a $500,000 home and put down $100,000, the principal would be $400,000.

  • Interest. This is the cost of borrowing the money from a lender, expressed as an annual percentage.

  • Property taxes. Annual taxes assessed by a government authority on your home and land are often collected as a part of your payment and paid through an escrow account.

  • FHA mortgage insurance. This is a cost built into FHA loans. You’ll make an upfront premium payment at closing, while ongoing premiums are factored into your monthly payment. Put down less than 10%, and you’ll pay mortgage insurance premiums for the life of the loan. Put down over 10%, and mortgage insurance premiums end after 11 years.

  • Homeowners association (HOA) fee. You may or may not have this included in your monthly payment: HOA dues can be assessed by a homeowners organization to pay for upkeep and improvements to shared amenities.

Can I lower my FHA monthly payment?

If the numbers in your FHA loan payment calculations seem a bit high, there are ways to lower them:

  • Extend the loan terms. If you know this is a roots-in-the-ground home, you can extend the number of years you’ll pay, say from 15 to 30 years. Yes, you’ll pay more interest over a longer time, but your monthly payment will be significantly lower.

  • Buy less house. A smaller loan means smaller payments. Maybe you can do with less house to start and make improvements over the coming years.

  • Avoid paying mortgage insurance premiums for life. FHA loans require mortgage insurance premiums, but to avoid paying them for the life of the loan, consider making a down payment of over 10%.

  • Get a better interest rate. Shop at least three lenders to get the best shot at a better interest rate. And mix up the competition: consider local and national lenders and an online lender, too.

Can my FHA monthly payment go up?

Of course, things can change. Here are a few instances when your monthly payment can go up, even after you’ve closed the loan and moved in:

If you have an adjustable-rate mortgage, and after your initial fixed-interest rate term ends, your interest rate can rise

Escrow items built into your monthly payment, such as property taxes or homeowners insurance premiums, are likely to go up a bit over time.

If you’re run behind on making a monthly payment, you can expect a late payment fee.