How to Calculate an FHA Loan Payment

Three Parts:Determining the Amount of Your LoanCalculating Your Monthly PaymentCalculating FHA Mortgage Insurance Costs

An FHA loan is a loan program sponsored by the Federal Housing Administration (FHA), designed to help low to moderate income families obtain financing to purchase a home. Because FHA loans generally require a relatively low down payment as compared to conventional loans, they must be backed by a guarantor in order for lenders to approve them. Ginnie Mae, the entity responsible for guaranteeing FHA loans, also determines loan terms and mortgage insurance amounts, which much be included in the monthly FHA payment. Therefore, calculating the payment on FHA loans requires special considerations.

Part 1
Determining the Amount of Your Loan

  1. Image titled Calculate an FHA Loan Payment Step 1
    Determine the selling price of the home. Your starting point for determining your monthly FHA loan payment is the selling price of your new home. This will be the offer price accepted by the seller, assuming the appraisal process goes smoothly. You can find the exact selling price of the home in your offer documents or by contacting your lender.[1]
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    Add in additional expenses. FHA loans allow you to roll in some additional expenses to your loan. The allowed expenses include repairs and renovations made to a home, including energy-efficient improvements. The FHA 203(k) loan allows you to finance these expenses, essentially adding them to the cost of the home so that the cost can be split up across the life of your mortgage. This process gives homeowners the opportunity to affordably renovate an outdated or run-down home.
    • If you qualify for these expenses and have priced out improvement and renovations, add in your estimated cost to the selling price.[2]
  3. Image titled Calculate an FHA Loan Payment Step 3
    Subtract your down payment. One of the key features of FHA loans is their low down payment. While most mortgage lenders require about 20 percent down, FHA loans require 3.5 or 10 percent, depending on your credit score. Your credit score must usually be above 580 to qualify for the 3.5 percent down payment. However, this is determined on a case-by-case basis. Calculate your down payment and subtract it from the loan amount to get your amount to be financed.[3]
    • For example, for a $180,000 home, the 3.5 down payment would be $6,300, leaving you with an amount to be financed of $173,700.
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    Confirm your loan amount. After FHA loan approval, you are cleared to move ahead with your financing. At this stage, your lender will confirm your down payment and you will go through the closing, or settlement, process. After paying your closing costs, you will confirm the loan and take possession of the home. Check your loan documents to confirm the amount financed.[4]

Part 2
Calculating Your Monthly Payment

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    Use a standard loan payment calculator to determine your principal and interest payment amount. This will be your base amount, on which you add all of the other expenses included in your FHA loan payment. Conduct an online search to find a loan calculator website and enter the following information:
    • Loan amount. This is the amount of money you will be financing.
    • Interest rate. Your mortgage loan professional should be able to give you a reasonable estimate even before you lock in a rate.
    • Loan term. This is the number of years you will be financing the home, commonly set at a 30 year (or 360 month) term for an FHA loan.[5]
  2. Image titled Calculate an FHA Loan Payment Step 6
    Calculate your property taxes. Property taxes are paid monthly and are based on the value of your home. Find the amount of your yearly property taxes and divide it by 12 to get your monthly payment amount. You can get property tax information from the seller, your realtor, or through your county tax assessor's records department.[6]
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    Get a homeowner's insurance quote. This annual amount will also have to be broken down into 12 equal payments, to be added to your monthly FHA payment. Although homeowner's insurance premiums can vary greatly, 0.34 percent is a good average number to use as your annual premium amount if you do not have an insurance quote.
    • In relevant areas, flood insurance may also be required.[7]
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    Determine HOA expenses. Determine if you have any homeowner's association (HOA) or condominium association fees. Either the seller or your realtor will be able to give you this information. This amount is also included in the mortgage payment and assessed monthly.[8]

Part 3
Calculating FHA Mortgage Insurance Costs

  1. Image titled Calculate an FHA Loan Payment Step 9
    Determine your one-time, up-front insurance premium. With FHA loans, you are required to purchase and keep private mortgage insurance (PMI). This option requires that you pay a one-time, up-front PMI premium equal to 1.75 percent of the loan amount. This amount is due at closing. However, in some cases you may be able to finance this fee by adding it to your overall loan. Keep in mind that doing so will increase your loan amount, payment, and interest paid.[9]
    • Continuing with the example from the part "Determining the Amount of Your Loan," this payment would be 1.75 percent of the loan amount, which is $173,700.
    • So the up-front premium would be , or $3,039.75.
  2. Image titled Calculate an FHA Loan Payment Step 10
    Calculate your annual FHA mortgage insurance (MI) premium. This may vary according to current agency mandates, the value to loan amount ratio on your mortgage, and the duration of your loan. Typically, it will be between 0.45 and 1.05 percent of your loan amount annually. Your mortgage loan professional should be able to give you an exact percentage.[10]
  3. Image titled Calculate an FHA Loan Payment Step 11
    Divide to find your monthly premium. Once you have the annual mortgage insurance premium, you can divide by 12 to find the monthly premium. For example, an annual premium of $2,400 would be $200 per month.[11]
  4. Image titled Calculate an FHA Loan Payment Step 12
    Calculate your total FHA payment. Add the monthly principal and interest amount, property taxes, homeowner's insurance, homeowner's association fees, and monthly mortgage insurance premium together to get your total FHA loan monthly payment. Keep in mind that your mortgage insurance premiums are only an estimate and may change by the time your coverage is confirmed.[12]


  • You may be able to avoid having a monthly mortgage insurance amount added to your FHA loan payment by accepting a slightly higher interest rate.


  • Property values can fluctuate year to year, and therefore so can property taxes. Be prepared that higher property taxes will equate to a higher monthly FHA loan payment.

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Categories: Mortgages and Loans