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Estimate payments on an FHA loan, including the upfront and monthly mortgage insurance premium.
How does an FHA loan differ from a conventional one?
FHA loans are government-insured, which lets lenders accept a down payment as low as 3.5% and more flexible credit requirements than conventional loans. In exchange, FHA loans charge mortgage insurance premium (MIP) — an upfront charge financed into the loan, plus a smaller monthly charge on top of principal and interest.
Frequently asked questions
What is UFMIP vs. monthly MIP?
Upfront MIP (UFMIP) is a one-time 1.75% charge on the base loan amount, typically rolled into the loan rather than paid in cash, which is why it slightly increases the loan balance you pay interest on. Monthly MIP is a smaller ongoing charge, calculated here as an illustrative 0.55% annual rate on the base loan divided by 12.
Why is 3.5% the FHA minimum down payment?
That's the minimum down payment FHA allows for borrowers with a credit score of 580 or above; below that, FHA typically requires 10% down. It's the main reason FHA loans are popular with first-time buyers who haven't saved a full 20%.
Can I remove FHA mortgage insurance later?
It depends on your down payment: with 10% or more down, MIP typically drops off after 11 years; with less than 10% down, MIP usually lasts for the life of the loan. Many borrowers eventually refinance into a conventional loan once they have 20% equity specifically to eliminate ongoing mortgage insurance.
When does FHA make more sense than a conventional loan?
FHA tends to win when your down payment is small and/or your credit score is below what conventional lenders want for a good rate, since conventional PMI at a low credit score can cost more than FHA's MIP. With 20% down and strong credit, a conventional loan usually comes out ahead since it avoids mortgage insurance entirely.
Annual MIP shown at an illustrative 0.55% — actual HUD rates vary by loan amount, term and loan-to-value.