How To Calculate an FHA Mortgage Payment

How to calculate an FHA mortgage payment

Step 1: Determine the loan amount

1. Purchase Price x .965 = Base Loan Amount (assuming the Borrowers opt for the minimum 3.50% down payment)

2. Base Loan Amount x .0175 = Up Front Mortgage Insurance Premium (UFMIP)

3. Base Loan Amount + UFMIP = Final Loan Amount

Step 2: Determine the monthly payment

       1.    Principal + Interest Payment Calculation

• Click here to access a free mortgage payment calculator for principal + interest payments

           2.    Property Taxes = Purchase Price of home x 0.0125 divided by 12 months

3.    Monthly Mortgage Insurance (MMI) = Base Loan Amount x 0.0135 divided by 12 months

• Note: If the down payment is 5.00% or more, you will use 0.0130 instead of 0.0135 (see chart below for additional MMI options & scenarios)

4.    Homeowners Insurance (internal "walls-in" coverage: Feel free to estimate roughly $60.00 - $80.00 per month (this number will vary depending on your insurance coverage amounts and insurance company)

• Note: Other names for this insurance include "Hazard Insurance" and "Fire Insurance" (these terms all refer to the same type of insurance)

5.    Homeowners Association (HOA) Dues (Condominiums): This payment (when applicable) will vary depending on which condominium you choose.

• Note: If you buy a condominium, you can expect your Homeowners Insurance to be slightly lower (closer to the $35.00 - $45.00 per month range)

6.    Total FHA Mortgage Payment (add the total of numbers 1-5)

By following these simple steps, you now know how to calculate an FHA mortgage payment. Additional MMI options are listed below (based on variances of loan amount, LTV (down payment), and amortization term):

Lastly, an important distinction to make from FHA loans of the past, is that the duration of time that the Monthly Mortgage Insurance (MMI) must be maintained has changed significantly:

For more information and transparency about mortgage items like this, please feel free to contact me. In the meantime, I do hope this information was useful in helping you to learn how to calculate an FHA mortgage payment.