How to Calculate an FHA Loan Payment
Determine the selling price of the home., Add in additional expenses., Subtract your down payment., Confirm your loan amount., Use a standard loan payment calculator to determine your principal and interest payment amount., Calculate your property...
Step-by-Step Guide
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Step 1: Determine the selling price of the home.
Your starting point for determining your monthly FHA loan payment is the selling price of your new home.
This will be the offer price accepted by the seller, assuming the appraisal process goes smoothly.
You can find the exact selling price of the home in your offer documents or by contacting your lender., FHA loans allow you to roll in some additional expenses to your loan.
The allowed expenses include repairs and renovations made to a home, including energy-efficient improvements.
The FHA 203(k) loan allows you to finance these expenses, essentially adding them to the cost of the home so that the cost can be split up across the life of your mortgage.
This process gives homeowners the opportunity to affordably renovate an outdated or run-down home.
If you qualify for these expenses and have priced out improvement and renovations, add in your estimated cost to the selling price., One of the key features of FHA loans is their low down payment.
While most mortgage lenders require about 20 percent down, FHA loans require
3.5 or 10 percent, depending on your credit score.
Your credit score must usually be above 580 to qualify for the
3.5 percent down payment.
However, this is determined on a case-by-case basis.
Calculate your down payment and subtract it from the loan amount to get your amount to be financed.For example, for a $180,000 home, the
3.5 down payment would be $6,300, leaving you with an amount to be financed of $173,700. , After FHA loan approval, you are cleared to move ahead with your financing.
At this stage, your lender will confirm your down payment and you will go through the closing, or settlement, process.
After paying your closing costs, you will confirm the loan and take possession of the home.
Check your loan documents to confirm the amount financed., This will be your base amount, on which you add all of the other expenses included in your FHA loan payment.
Conduct an online search to find a loan calculator website and enter the following information:
Loan amount.
This is the amount of money you will be financing.
Interest rate.
Your mortgage loan professional should be able to give you a reasonable estimate even before you lock in a rate.
Loan term.
This is the number of years you will be financing the home, commonly set at a 30 year (or 360 month) term for an FHA loan., Property taxes are paid monthly and are based on the value of your home.
Find the amount of your yearly property taxes and divide it by 12 to get your monthly payment amount.
You can get property tax information from the seller, your realtor, or through your county tax assessor's records department., This annual amount will also have to be broken down into 12 equal payments, to be added to your monthly FHA payment.
Although homeowner's insurance premiums can vary greatly,
0.34 percent is a good average number to use as your annual premium amount if you do not have an insurance quote.
In relevant areas, flood insurance may also be required., Determine if you have any homeowner's association (HOA) or condominium association fees.
Either the seller or your realtor will be able to give you this information.
This amount is also included in the mortgage payment and assessed monthly., With FHA loans, you are required to purchase and keep private mortgage insurance (PMI).
This option requires that you pay a one-time, up-front PMI premium equal to
1.75 percent of the loan amount.
This amount is due at closing.
However, in some cases you may be able to finance this fee by adding it to your overall loan.
Keep in mind that doing so will increase your loan amount, payment, and interest paid.Continuing with the example from the part "Determining the Amount of Your Loan," this payment would be
1.75 percent of the loan amount, which is $173,700.
So the up-front premium would be
0.0175×$173,700{\displaystyle
0.0175\times \$173,700}, or $3,039.75. , This may vary according to current agency mandates, the value to loan amount ratio on your mortgage, and the duration of your loan.
Typically, it will be between
0.45 and
1.05 percent of your loan amount annually.
Your mortgage loan professional should be able to give you an exact percentage., Once you have the annual mortgage insurance premium, you can divide by 12 to find the monthly premium.
For example, an annual premium of $2,400 would be $200 per month., Add the monthly principal and interest amount, property taxes, homeowner's insurance, homeowner's association fees, and monthly mortgage insurance premium together to get your total FHA loan monthly payment.
Keep in mind that your mortgage insurance premiums are only an estimate and may change by the time your coverage is confirmed. -
Step 2: Add in additional expenses.
-
Step 3: Subtract your down payment.
-
Step 4: Confirm your loan amount.
-
Step 5: Use a standard loan payment calculator to determine your principal and interest payment amount.
-
Step 6: Calculate your property taxes.
-
Step 7: Get a homeowner's insurance quote.
-
Step 8: Determine HOA expenses.
-
Step 9: Determine your one-time
-
Step 10: up-front insurance premium.
-
Step 11: Calculate your annual FHA mortgage insurance (MI) premium.
-
Step 12: Divide to find your monthly premium.
-
Step 13: Calculate your total FHA payment.
Detailed Guide
Your starting point for determining your monthly FHA loan payment is the selling price of your new home.
This will be the offer price accepted by the seller, assuming the appraisal process goes smoothly.
You can find the exact selling price of the home in your offer documents or by contacting your lender., FHA loans allow you to roll in some additional expenses to your loan.
The allowed expenses include repairs and renovations made to a home, including energy-efficient improvements.
The FHA 203(k) loan allows you to finance these expenses, essentially adding them to the cost of the home so that the cost can be split up across the life of your mortgage.
This process gives homeowners the opportunity to affordably renovate an outdated or run-down home.
If you qualify for these expenses and have priced out improvement and renovations, add in your estimated cost to the selling price., One of the key features of FHA loans is their low down payment.
While most mortgage lenders require about 20 percent down, FHA loans require
3.5 or 10 percent, depending on your credit score.
Your credit score must usually be above 580 to qualify for the
3.5 percent down payment.
However, this is determined on a case-by-case basis.
Calculate your down payment and subtract it from the loan amount to get your amount to be financed.For example, for a $180,000 home, the
3.5 down payment would be $6,300, leaving you with an amount to be financed of $173,700. , After FHA loan approval, you are cleared to move ahead with your financing.
At this stage, your lender will confirm your down payment and you will go through the closing, or settlement, process.
After paying your closing costs, you will confirm the loan and take possession of the home.
Check your loan documents to confirm the amount financed., This will be your base amount, on which you add all of the other expenses included in your FHA loan payment.
Conduct an online search to find a loan calculator website and enter the following information:
Loan amount.
This is the amount of money you will be financing.
Interest rate.
Your mortgage loan professional should be able to give you a reasonable estimate even before you lock in a rate.
Loan term.
This is the number of years you will be financing the home, commonly set at a 30 year (or 360 month) term for an FHA loan., Property taxes are paid monthly and are based on the value of your home.
Find the amount of your yearly property taxes and divide it by 12 to get your monthly payment amount.
You can get property tax information from the seller, your realtor, or through your county tax assessor's records department., This annual amount will also have to be broken down into 12 equal payments, to be added to your monthly FHA payment.
Although homeowner's insurance premiums can vary greatly,
0.34 percent is a good average number to use as your annual premium amount if you do not have an insurance quote.
In relevant areas, flood insurance may also be required., Determine if you have any homeowner's association (HOA) or condominium association fees.
Either the seller or your realtor will be able to give you this information.
This amount is also included in the mortgage payment and assessed monthly., With FHA loans, you are required to purchase and keep private mortgage insurance (PMI).
This option requires that you pay a one-time, up-front PMI premium equal to
1.75 percent of the loan amount.
This amount is due at closing.
However, in some cases you may be able to finance this fee by adding it to your overall loan.
Keep in mind that doing so will increase your loan amount, payment, and interest paid.Continuing with the example from the part "Determining the Amount of Your Loan," this payment would be
1.75 percent of the loan amount, which is $173,700.
So the up-front premium would be
0.0175×$173,700{\displaystyle
0.0175\times \$173,700}, or $3,039.75. , This may vary according to current agency mandates, the value to loan amount ratio on your mortgage, and the duration of your loan.
Typically, it will be between
0.45 and
1.05 percent of your loan amount annually.
Your mortgage loan professional should be able to give you an exact percentage., Once you have the annual mortgage insurance premium, you can divide by 12 to find the monthly premium.
For example, an annual premium of $2,400 would be $200 per month., Add the monthly principal and interest amount, property taxes, homeowner's insurance, homeowner's association fees, and monthly mortgage insurance premium together to get your total FHA loan monthly payment.
Keep in mind that your mortgage insurance premiums are only an estimate and may change by the time your coverage is confirmed.
About the Author
Theresa Simmons
Writer and educator with a focus on practical home improvement knowledge.
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