FHA mortgage insurance
FHA loans are insured by the Federal Housing Administration, which lets lenders accept down payments from 3.5% (with a credit score of 580 or more). In return, every FHA loan carries two mortgage insurance premiums (MIP), which protect the lender, not you:
- Upfront MIP: 1.75% of the base loan (the price minus your down payment). It can be added to the loan or paid in cash at closing, but not split between the two.
- Annual MIP: for loans longer than 15 years with a base loan of $726,200 or less, 0.55% a year with less than 5% down and 0.50% with 5% or more. Larger loans pay 0.70% or 0.75%. Loans of 15 years or less pay 0.15% to 0.65%. Despite the name, it's paid monthly, as part of your payment.
The $726,200 split is a fixed figure in HUD's table, not the current conforming loan limit, so it doesn't move each year.
How the calculator works it out
The calculator takes the base loan, adds 1.75% if you leave “Add the upfront MIP to the loan” ticked, and works out principal and interest on that total. Then, for each year of the loan, it averages the balance scheduled for that year and charges the annual rate on it, split into 12 equal monthly amounts:
monthly MIP = annual rate × average scheduled balance for the year ÷ 12
HUD figures the premium on the base loan, so when the upfront MIP is financed the calculator takes it back out of the balance first. That's why financing the upfront premium raises your principal and interest but not your monthly MIP. Because the balance falls each year, the MIP falls slightly each year too. It follows the original schedule, so extra payments shorten the loan but don't lower the MIP rate or its amount.
The rate comes from your down payment: a loan-to-value ratio (LTV, the base loan as a share of the price) above 95% pays 0.55%, and 95% or less pays 0.50%. Exactly 5% down counts as 95%.
How long MIP lasts
With 10% or more down (an LTV of 90% or less), annual MIP ends after 11 years. With less than 10% down, it lasts for the life of the loan. The calculator's summary shows when it ends, if it does. Paying the loan down faster doesn't end it early; the usual way out is to refinance, for example into a conventional loan once you have enough equity. The refinance calculator compares the principal and interest of keeping your loan with a new one.
Worked examples
All three use a $400,000 home at 6.5%, with the upfront MIP financed, before taxes and homeowners insurance.
3.5% down, 30 years
The base loan is $386,000. The upfront MIP of $6,755 brings the loan to $392,755. Principal and interest is $2,482.48 a month, and the first year's MIP adds $176.02, for $2,658.50. The MIP drops to $173.98 in year 2 and $144.37 in year 12, and runs to the last year, for about $41,660 of MIP in all. Paying the $6,755 at closing instead lowers principal and interest to $2,439.78 and saves about $8,610 of interest over 30 years, while the MIP stays the same.
10% down, 30 years
With $40,000 down, the base loan is $360,000 and the loan with upfront MIP is $366,300. At 0.50%, the first year's MIP is $149.24, for a first payment of $2,464.51. Because the LTV is 90%, MIP stops after 132 payments (11 years), and totals about $18,300. At exactly 5% down ($20,000), the rate is also 0.50%: $157.53 a month in year 1, but for the life of the loan.
3.5% down, 15 years
The same $392,755 loan over 15 years costs $3,421.32 a month in principal and interest, and the 0.40% rate adds $126.29, for $3,547.61. MIP still lasts the life of the loan, but that's 15 years instead of 30: about $13,490 in all. Total interest is about $223,080, against about $500,940 on the 30-year loan.
Pitfalls and things to check
- Add property tax and homeowners insurance in the “Taxes, insurance” section. Lenders often collect them with the payment, and they can add a lot.
- The rate you enter drives most of the payment. Use a rate quoted for an FHA loan, ideally from a lender's Loan Estimate.
- The calculator lets you pick any loan type with FHA. Check with your lender which FHA products they offer.
- The results don't check whether you qualify. HUD and your lender both have credit, income and property requirements.
- The results leave out lender fees and other closing costs. See how we calculate for what's included.
Common questions
Can I get rid of FHA mortgage insurance?
With 10% or more down, it ends on its own after 11 years. With less, it lasts as long as the loan, so the usual route is refinancing into a different loan.
Is FHA or conventional cheaper?
It depends on your rate, down payment and PMI quote. Enter both in compare mortgages to see payments and total costs side by side.
Should I finance the upfront MIP or pay it in cash?
Financing keeps cash in your pocket at closing but costs interest on the premium for the life of the loan, as the first example shows. Untick the box to see both.
What is the minimum down payment?
3.5% with a credit score of 580 or more. The calculator shows a note if you enter less. Lower scores have different requirements; check with your lender.
How much house can I afford with an FHA loan?
Choose FHA in the affordability calculator. It includes the MIP and the 3.5% minimum down payment.
Figures from HUD Handbook 4000.1 (Appendix 1.0) and Mortgagee Letter 2023-05, current as of 21 September 2026.