Use this comprehensive tool to estimate your total monthly FHA mortgage payment, including Principal, Interest, Property Taxes, Home Insurance, and the mandatory FHA Mortgage Insurance Premium (MIP).
Calculate FHA Mortgage Payment
FHA Mortgage Payment Formula
P&I (Principal & Interest) Monthly Payment Formula:
$$ M = P \left[ \frac{r(1+r)^n}{(1+r)^n – 1} \right] $$Total Monthly Payment Formula:
$$ \text{Total Payment} = P\&I + \frac{\text{Annual Tax}}{12} + \frac{\text{Annual Insurance}}{12} + \frac{\text{Annual MIP}}{12} $$Formula Source: CFPB & HUD Guidance
Variables Explained
- M: Total Monthly Payment (PITI + MIP).
- P: Principal Loan Amount (including Upfront Mortgage Insurance Premium, or UFMIP).
- r: Monthly Interest Rate (Annual Rate / 12 / 100).
- n: Total Number of Payments (Loan Term in Years × 12).
- Annual Tax: Yearly Property Tax estimate (paid monthly to escrow).
- Annual Insurance: Yearly Homeowners Insurance estimate (paid monthly to escrow).
- Annual FHA MIP Rate: The annual percentage rate of the FHA Mortgage Insurance Premium, calculated against the loan balance and paid monthly.
What is an FHA Mortgage Payment?
An FHA mortgage payment is the total monthly obligation for a loan insured by the Federal Housing Administration (FHA). Unlike conventional loan payments, which are often summarized as P&I (Principal and Interest), the FHA payment typically includes four components: PITI plus MIP.
PITI stands for Principal, Interest, Taxes, and Insurance. The unique addition for an FHA loan is the mandatory Mortgage Insurance Premium (MIP). This insurance protects the lender against loss if the borrower defaults. MIP is paid in two parts: an Upfront MIP (UFMIP), which is usually financed into the loan amount, and an Annual MIP, which is paid in monthly installments.
Understanding the total payment is crucial because the MIP and escrow components (Taxes and Insurance) can significantly increase the effective monthly cost compared to P&I alone.
How to Calculate FHA Mortgage Payment (Example)
- Determine P&I: Start with the total loan amount (P), annual rate (R), and term (N) to calculate the monthly Principal and Interest payment using the standard amortization formula.
- Calculate Monthly Property Tax: If your annual tax is $3,600, divide it by 12. ($3,600 / 12 = $300).
- Calculate Monthly Home Insurance: If your annual insurance is $1,440, divide it by 12. ($1,440 / 12 = $120).
- Calculate Monthly MIP: Multiply the loan amount by the annual MIP rate (e.g., $250,000 * 0.55% / 12 = $114.58).
- Sum the Components: Add the P&I amount to the monthly Tax, Insurance, and MIP figures to get the estimated total monthly FHA payment.
Frequently Asked Questions (FAQ)
The FHA requires MIP because FHA loans are designed for borrowers with lower down payments (as little as 3.5%) or lower credit scores. The MIP protects the lender against the increased risk associated with these loans.
Does FHA MIP ever go away?For most FHA loans with a Loan-to-Value (LTV) ratio under 90% at the time of closing (i.e., a down payment of 10% or more), the MIP will be cancelled after 11 years. For LTVs above 90%, the MIP is usually required for the entire life of the loan.
What does PITI stand for?PITI is a common acronym in mortgage lending that stands for Principal, Interest, Taxes, and Insurance. It represents the four core components of a standard monthly mortgage payment that includes an escrow account.
What is the typical FHA loan term?While FHA loans can have terms ranging from 15 to 30 years, the 30-year fixed-rate mortgage is the most common choice among borrowers.