Use the USDA Mortgage Calculator below to quickly estimate your total monthly payment, including the USDA Annual Fee (MIP) and the cost of the financed Upfront Guarantee Fee.
USDA Mortgage Calculator
Estimated Total Monthly Payment
Calculation Steps:
USDA Mortgage Calculator Formula
The USDA Guaranteed Loan calculation involves calculating the amortized Principal & Interest (P&I) payment based on the total loan amount (including the financed upfront fee), plus the monthly portion of the Annual Fee (MIP).
Monthly P&I Payment (M) = TP * [ i * (1 + i)^n ] / [ (1 + i)^n - 1 ]
Monthly Annual Fee (MAF) = (TP * Annual Fee Rate) / 12 / 100
Total Monthly Payment = M + MAF
Where:
TP = Total Principal (Original Loan + Financed Upfront Fee)
i = Monthly Interest Rate (Annual Rate / 12 / 100)
n = Total Number of Payments (Term in Years * 12)
Formula Source: USDA Guaranteed Underwriting System Handbook (PDF) | Consumer Financial Protection Bureau (CFPB)
Variables Explained
- Loan Principal: The initial amount borrowed before any fees are financed.
- Annual Interest Rate (%): The yearly rate charged by the lender.
- Loan Term (Years): The duration over which the loan is repaid, typically 30 years.
- Upfront Guarantee Fee (%): An initial fee charged by the USDA, which is typically financed (added) to the principal loan amount.
- Annual Fee (MIP) (%): An annual mortgage insurance fee, paid monthly, calculated against the remaining principal balance.
Related Calculators
- Standard Amortization Schedule Calculator
- FHA Mortgage Insurance Premium (MIP) Calculator
- Debt-to-Income (DTI) Ratio Calculator
- Rural Home Affordability Calculator
What is the USDA Guaranteed Loan Program?
The USDA Single Family Housing Guaranteed Loan Program is a mortgage program backed by the U.S. Department of Agriculture (USDA) designed to help low-to-moderate-income buyers purchase homes in eligible rural areas. It is unique in that it offers 100% financing, meaning qualified borrowers do not need to make a down payment.
A key feature of the USDA loan is the inclusion of two primary fees: the Upfront Guarantee Fee and the Annual Fee (sometimes referred to as Mortgage Insurance Premium or MIP). The Upfront Fee is often financed, adding to the total loan amount, while the Annual Fee is a recurring cost calculated monthly, which significantly impacts the total monthly payment.
Eligibility is based on the property location (must be in a designated rural area) and the borrower’s income (must not exceed 115% of the median household income for the area).
How to Calculate a USDA Mortgage Payment (Example)
- Determine Total Principal (TP): Add the original loan amount ($250,000) to the financed upfront fee (1.0% of $250,000, or $2,500). TP = $252,500.
- Calculate Monthly Interest Rate (i) and Term (n): For a 6.0% annual rate over 360 months (30 years), i = 0.06 / 12 = 0.005. n = 360.
- Calculate Monthly P&I Payment (M): Plug TP, i, and n into the standard amortization formula. In this example, M ≈ $1,513.79.
- Calculate Monthly Annual Fee (MAF): Apply the annual fee rate (e.g., 0.35%) to the total principal ($252,500). MAF = ($252,500 * 0.0035) / 12 ≈ $73.65.
- Calculate Total Monthly Payment: Add P&I (M) to MAF. Total Payment ≈ $1,513.79 + $73.65 = $1,587.44.
Frequently Asked Questions (FAQ)
Is the Upfront Guarantee Fee paid in cash or financed?
The Upfront Guarantee Fee is typically financed (rolled) into the total loan amount, which is why it affects the principal used for the monthly P&I calculation.
What is the difference between the Upfront Fee and the Annual Fee?
The Upfront Fee is a one-time charge, usually financed into the loan. The Annual Fee is a recurring cost, paid in monthly installments, that acts like mortgage insurance.
Can I avoid the USDA Annual Fee (MIP)?
No. Unlike Conventional loans, the USDA Annual Fee is required for the life of the loan and does not automatically fall off once a certain equity percentage is reached.
Are USDA loans only for agricultural properties?
No. Despite the name, the program is for single-family residences in designated rural areas, which often include suburbs and small towns, not just working farms.