FHA loan calculator: what 3.5% down really costs each month
An FHA loan lowers the cash you need at closing and raises the payment you carry for years. This page prices both sides — including upfront and annual mortgage insurance — so the trade-off is visible before you apply.
Down payment: $12,250 · Loan amount: $337,750
Estimated monthly payment
$2,746.83
Where your monthly payment goes
- Principal & interest$2,10777%
- Property taxes$32112%
- Homeowners insurance$1505%
- Mortgage insurance (PMI)$1696%
- Principal & interest
- $2,107.12
- Property taxes
- $320.83
- Homeowners insurance
- $150.00
- Mortgage insurance (PMI)
- $168.88
With less than 20% down, this estimate adds PMI at roughly 0.6% of the loan per year. Reaching 20% equity typically lets you cancel it.
The calculator applies a generic mortgage-insurance estimate. FHA annual MIP is priced differently from conventional PMI — use the worked example below for FHA-specific numbers.
How an FHA payment is built
An FHA mortgage is a normal fixed-rate loan that the Federal Housing Administration insures against default. The insurance is what makes a 3.5% down payment and a 580 credit score acceptable to a lender — and you, not the lender, pay for it.
That cost arrives in two pieces. Upfront mortgage insurance premium (UFMIP) is 1.75% of the base loan and is almost always rolled into the balance, so you finance it over 30 years rather than paying it at closing. Annual MIP is charged monthly and is calculated on the loan amount, not on your remaining equity, so it does not shrink as you pay down the balance.
Worked example: $350,000 home, 3.5% down, 6.375% for 30 years
| Line item | Amount | Notes |
|---|---|---|
| Down payment (3.5%) | $12,250 | Cash due at closing |
| Base loan amount | $337,750 | Purchase price less down payment |
| Upfront MIP (1.75%) | $5,911 | Financed into the loan |
| Total financed | $343,661 | Base loan plus UFMIP |
| Principal & interest | $2,144/mo | 6.375% over 360 payments |
| Annual MIP (0.55%) | $155/mo | Charged on the base loan |
| Property taxes (1.1%) | $321/mo | County assessment, escrowed |
| Homeowners insurance | $150/mo | $1,800 per year |
| Estimated total payment | $2,770/mo | FHA PITI plus MIP |
Rounded to the nearest dollar. Financing UFMIP adds roughly $37 per month to principal and interest over the full term — about $13,300 across 30 years.
FHA versus conventional at the same price
The honest comparison is not FHA against conventional in the abstract, but against the conventional terms you personally qualify for. Below is the same $350,000 purchase priced three ways.
| Scenario | Cash at closing | Monthly insurance | Cancellable? |
|---|---|---|---|
| FHA, 3.5% down, 640 score | $12,250 | ~$155 | No (life of loan) |
| Conventional, 5% down, 660 score | $17,500 | ~$194 | Yes, at 20% equity |
| Conventional, 5% down, 760 score | $17,500 | ~$78 | Yes, at 20% equity |
PMI figures use typical borrower-paid monthly coverage rates; actual pricing varies by insurer, loan-to-value and score band.
When FHA is the right call
- Your score is under about 680. Conventional PMI pricing climbs steeply in the low-score bands while FHA MIP does not vary by credit score at all.
- Your debt ratio is tight. FHA underwriting routinely allows higher debt-to-income than conventional, especially with compensating factors such as reserves.
- You have a recent credit event. FHA seasoning periods after bankruptcy or foreclosure are shorter than conventional.
- You plan to refinance. If you expect your score or the rate environment to improve, life-of-loan MIP matters less because you will not carry it for 30 years.
Where FHA costs you
On the example above, life-of-loan MIP at $155 per month is roughly $55,800 over 30 years, on top of the $5,911 upfront premium. A borrower with strong credit who chooses FHA out of habit rather than necessity is buying insurance they could have cancelled in five or six years. Sellers in competitive markets also sometimes discount FHA offers over appraisal and property-condition requirements, which is worth knowing before you write an offer.
FHA questions
What credit score do I need for an FHA loan?+
FHA program rules allow 3.5% down with a score of 580 or higher, and 10% down between 500 and 579. In practice most lenders set their own overlay around 620, so two lenders can quote very different answers on the same file.
How much is FHA mortgage insurance?+
There are two charges. Upfront MIP is 1.75% of the base loan amount and is normally financed into the balance. Annual MIP is typically 0.55% of the loan for a 30-year term with less than 5% down, divided by 12 and added to each payment.
Does FHA mortgage insurance ever go away?+
If you put less than 10% down, annual MIP stays for the life of the loan. With 10% or more down it drops off after 11 years. Most borrowers who want out refinance into a conventional loan once they hold about 20% equity.
Is an FHA loan cheaper than a conventional loan?+
It depends almost entirely on your credit score. Below roughly 680, conventional PMI is priced harshly and FHA usually wins on monthly cost. Above about 720 with 5% or more down, conventional is usually cheaper because PMI is smaller and cancellable.
Can I use an FHA loan for a duplex?+
Yes, on one- to four-unit properties as long as you occupy one unit as your primary residence for at least a year. Lenders can often count a portion of the projected rent from the other units toward qualifying income.
What are FHA loan limits?+
Limits are set by county and adjust yearly. The floor applies in lower-cost counties and a much higher ceiling applies in high-cost metros. Check your specific county before assuming a purchase price qualifies.
Eligible for VA benefits? Compare against a zero-down VA loan, which charges no monthly mortgage insurance at all.