FHA Mortgage Calculator

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FHA Mortgage: Calculators Explained

FHA loans, which are mortgages backed by the Federal Housing Administration, generally require lower down payments and have less stringent qualifications than conventional mortgage loans. FHA’s lower closing costs combined with their relaxed standards are meant to help homebuyers who generally would not qualify for traditional mortgage loans.

Through the lower down payments of FHA loans, home buyers with an average credit score of 580 or higher, often qualify for down payments as low as 3.5%. These lower down payments make it easier for borrowers with low and moderate incomes to purchase homes when they may not qualify for the more stringent standards of traditional home mortgages.

Your Monthly Payments: Understanding FHA Mortgage Calculators

FHA home mortgages have many benefits and offer chances that might generally be unavailable. However, the end product and details can be a bit confusing and leave homeowners wondering exactly what they are paying and what goes into those payments.

Thankfully there are many calculators out there to estimate monthly payments and help to decide what you can reasonably afford and how it would affect your working budget. These calculators are a handy tool, but can still leave a homebuyer confused about where all of their money is going.

Estimating your monthly payments is easy with one of these calculators. You put in the figures they ask for and press enter, then the calculator does all of the hard work for you. However, now you may be wondering what makes up the final number that would be your payments?

Let’s take a peek at what makes up your monthly payment. Payment estimates from FHA calculators should generally include the amount to be paid towards the principal balance, the taxes that are included in the price monthly, interest charge for the month, and insurance payment. These are the common elements that make up a monthly payment with an FHA home mortgage.

One final aspect of FHA mortgage calculators is the monthly mortgage insurance premium. This premium makes up part of your monthly payment for the lifetime of your loan (depending on down payment) and should be considered when looking to an FHA home mortgage. This mortgage insurance is a safeguard for lenders ensuring the investment will be paid back should you default on the loan. The mortgage insurance is also what allows homebuyers with lower credit scores and smaller down payments to qualify for home loans when other lenders would deny them.

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Fill in the parameters of your loan to find the costs of your FHA mortgage, including your mortgage insurance premium.

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The FHA permits as little as 3.5% down, but you must have a credit score above 580 to be eligible for that level of down payment. Check your credit score for free.

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What Does an FHA Loan Calculator Do?

When you use an FHA mortgage loan calculator, you can get answers to the nagging question of “Can I afford to finance my home with an FHA home mortgage?”

Now you’re probably thinking about how to find the answers you need from these calculators. It is relatively easy with most calculators. You will input the numbers into each of the spaces provided. The factors asked for on most FHA loan calculators are the price you wish to pay for your home, the down payment you have, the interest rate you will be paying, and the number of years on the loan (the term of the loan).

After you have entered your answers into all of the available fields, you will be provided the estimated payment you will be making monthly. Some calculators give you the option to provide more detail. The detail provided in this option will be a breakdown of what makes up your monthly mortgage payment. Included in these details will be upfront costs for mortgage insurance, monthly premium amounts, taxes, insurance, principal, and interest charges.

When you have information regarding how much you can reasonably afford to pay each month, and how much your payments might be, you will be ready to look for the FHA lender that can provide you with the most advantageous rates for your needs.

More: Helpful Mortgage Calculator

The FHA Mortgage Monthly Payment Explained

When choosing an FHA mortgage calculator, it is essential that you look for one that includes all of the pertinent factors, not just principal and interest. Utilizing the appropriate calculator will allow you to get a real idea of what to expect and what you can reasonably work with. By providing you with a more comprehensive estimate, you will avoid later surprises or difficulties of higher payments.

Use an FHA home mortgage calculator that provides you with at least the following insights:

  • Principal Balance: Your principal balance will be the amount that you borrow for your home minus the amount of your down payment. Example: the home cost is $250,000, and you pay a down payment of $50,000, your principal balance would be $200,000.
  • Interest Charges: Interest charges are the fee you pay for borrowing money from your lender and is in the form of an annual percentage. This will vary depending on many factors.
  • Property Taxes: Property taxes are the taxes imposed by the government on your land and home. These taxes are often included as part of your monthly payment and kept in an escrow account for their payment.
  • Mortgage Insurance: This is the monthly mortgage insurance premium that is part of an FHA loan. You will have to pay a portion of the premium at the time of closing, and the remaining is figured into your monthly mortgage payments for the life of the loan (depending on down payment).]
  • Other fees may also be included in your monthly payment, depending on the lender and location of the home. These additional fees could consist of items like homeowner’s association fees and property insurance.

More: Helpful Mortgage Calculator

How Can I Lower My FHA Mortgage Monthly Payment?

When considering an FHA loan and calculating your estimated monthly payments, it is essential to remember that there are many variables. For this reason, should you see the calculations are more than what you were looking for, there are ways to lower the monthly fees? Here are some of the most common ways to reduce these fees:

  • Interest Rates: Shop different lenders to find the lowest possible interest rate for your specific situation.
  • Loan Term: Choosing to extend the time you pay on your loan will decrease your monthly payments. Extending from a 15-year term to a 30-year term will make a sizable difference in your monthly payment. It is crucial to understand that you will also be paying more interest charges with an extended-term.
  • Buy Lower: If the monthly payment is out of the range you are looking to be in, choosing a home that has a lower price tag means that your loan will be less, making your monthly payments smaller as well.
  • Larger Down Payment: Making a larger down payment on your home will lower the principal balance of the loan and thereby decrease the monthly payment.

More: Helpful Mortgage Calculator

Will My FHA Loan Payment Increase?

There are many variables with the purchase of a home with these variables sometimes comes increases. Here are a few reasons that you may see an increase in your monthly FHA mortgage payments:

  • Adjustable-Rate Mortgage: With adjustable-rate mortgages, you may see an increase in your monthly payment after your fixed-interest rate period ends. At this time your rates may go up or in rare cases decrease.
  • Property Taxes: Property taxes are not set by your loan. They are assessed yearly by your county assessor. Should your property taxes increase, then your monthly payment will increase as well to compensate. This increase also applies to homeowner’s insurance policies that are paid through your mortgage payments.
  • Late Payments: Paying your monthly payments late will result in an increase in the form of a late payment fee. This amount is set by your lending company and can is found in your loan documents.

More: Helpful Mortgage Calculator

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