FHA Loan Calculator
3.5% down, but with UFMIP (1.75% upfront) and MIP for the life of the loan. The full picture, not just P&I.
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Sam's Take
FHA's 3.5% down is great for first-time buyers without big savings, but the catch is permanent. Unlike conventional PMI which drops at 78% LTV automatically, FHA's MIP stays for the life of the loan when you put less than 10% down. Plan to refinance into conventional once you have 20% equity — usually 4-7 years in if appreciation cooperates. Otherwise you're paying mortgage insurance for 30 years, which is a real cost that often gets ignored in 'how cheap FHA is' marketing.
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What an FHA loan actually is, in plain English
An FHA loan is a mortgage where the federal government (the Federal Housing Administration) insures the loan for the bank. That insurance is what lets the bank say yes to a borrower they'd otherwise say no to — someone with a smaller down payment, a thinner credit history, or a 580-680 credit score that wouldn't clear conventional underwriting.
That insurance isn't free. You pay for it, in two pieces:
- UFMIP (Upfront Mortgage Insurance Premium) — 1.75% of the loan amount, paid at closing. Most people roll it into the loan instead of paying cash. On a $300K loan that's $5,250 added to what you owe.
- MIP (Annual Mortgage Insurance Premium) — 0.50-0.55% of the loan per year, charged monthly. On that same $300K loan that's around $135/month. And here's the catch: if you put less than 10% down (which is the whole point of FHA for most people), MIP stays on the loan forever. You don't get to drop it at 20% equity like you would with conventional PMI.
FHA vs Conventional — when each one wins
If you have 5% to put down and decent credit (700+), conventional usually wins. PMI on conventional drops automatically at 78% loan-to-value, so you stop paying it in 5-10 years depending on appreciation. FHA's MIP doesn't drop at all if you started with less than 10% down — you'd pay it for the full 30 years.
If you have 3.5% to put down and a 580-680 credit score, FHA is often the only door open to you. In that case the smart play is to take the FHA loan, get into the house, build equity through payments and any appreciation, and then refinance into a conventional loan once you have 20% equity. That move kills the MIP for good. Most FHA buyers I know do this in year 4-7.
FHA loan limits in 2026
FHA has a loan ceiling that varies by county. In most US counties the 2026 limit is $498,257 for a single-family. House-hackers (buying a 2-4 unit and living in one) get a much higher ceiling — up to $957,650 for a 4-unit in most counties. High-cost markets like Boston, NYC, and San Francisco go up to $1,149,825 for single-family and $2,211,600 for 4-unit. The actual number for your county is at HUD.gov.