FHA loans allow low down payments but add mortgage insurance. See the full monthly payment, including the annual MIP, and the upfront premium rolled into the loan.
An FHA loan is a government-backed mortgage that allows down payments as low as 3.5% and more flexible credit, in exchange for mortgage insurance. This estimates the full monthly payment, including the annual insurance premium and the upfront premium rolled into the loan.
FHA loans carry two insurance charges. An upfront premium, commonly 1.75% of the base loan, is usually financed into the balance. An annual premium, often around 0.55% for a 30-year loan, is divided by twelve and added to each payment. Unlike conventional PMI, FHA annual insurance typically stays for the life of the loan when you put less than 10% down.
FHA loans shine for buyers with smaller down payments or lower credit scores, where a conventional loan would cost more or be out of reach. The tradeoff is ongoing insurance. Buyers who can reach 20% down, or who expect their credit to support a conventional loan, sometimes refinance out of FHA later to drop the insurance.
3.5% for borrowers with qualifying credit. Lower scores may require 10% down.
With less than 10% down it generally lasts the life of the loan. Many borrowers refinance to a conventional loan once they have enough equity to drop it.
A one-time charge, commonly 1.75% of the base loan, usually added to the balance rather than paid in cash at closing.
See the exact formula and a worked example on our methodology page.