Free FHA Loan Calculator 2026

What Is an FHA Loan?

FHA loans are mortgages insured by the Federal Housing Administration, issued by FHA-approved lenders. They were designed to help first-time homebuyers with lower credit scores and smaller down payments access homeownership.

Key FHA loan limits for 2026:

• 1-unit home: Up to $766,550 (varies by county)
• 2-unit: Up to $981,500
• 3-unit: Up to $1,186,350
• 4-unit: Up to $1,474,400

FHA Loan Requirements 2026

• Credit score: 580+ for 3.5% down; 500-579 requires 10% down
• Down payment: Minimum 3.5% for credit 580+
• Employment: Must verify steady employment income for the past 2 years
• DTI ratio: Front-end ratio (housing/debt-to-income) max 31%; back-end (all debts) max 43% (higher with strong compensating factors)
• Primary residence only: Must be your main home
• Property standards: Must meet FHA's Minimum Property Standards (MPS) and pass HUD inspection
• Gift funds: Down payment can be 100% gift from family, employer, or charity

FHA Mortgage Insurance (MIP): The Hidden Cost

FHA loans require mortgage insurance — but it's different from conventional PMI:

• Upfront MIP: 1.75% of loan amount. Can be paid cash at closing OR rolled into the loan
• Annual MIP: 0.55-1.05% of loan per year, divided into monthly payments
• Term: If down payment is 10%+, annual MIP cancels after 11 years. If under 10% down, MIP is required for life of loan

Critical difference from PMI: With 3.5% down (the minimum), FHA MIP is required for the entire 30-year loan term — it never cancels. This makes FHA more expensive long-term than conventional with 20% down.

FHA MIP Rates (2026)

• 30-year term, LTV ≤ 95%: 0.55% annual
• 30-year term, LTV > 95%: 0.75% annual
• 15-year term, LTV ≤ 90%: 0.45% annual
• 15-year term, LTV > 90%: 0.70% annual

Example: $386,000 loan (after 3.5% down on $400K), 30-year, 6.25% rate, LTV 96.5% → annual MIP = $2,895 ($241/month). Plus $6,755 upfront MIP.

FHA vs Conventional Loan: Side-by-Side

• Minimum down payment: FHA 3.5% vs Conventional 3% (or 5-20%+)
• Credit score: FHA 500+ vs Conventional 620-640+ (lower for some programs)
• Mortgage insurance: FHA MIP for life (if <10% down) vs Conventional PMI cancellable at 80% LTV
• Interest rate: FHA typically 0.125-0.25% lower than conventional
• Loan limits: FHA capped by county; conventional has much higher limits
• Property types: FHA limited to primary residence; conventional allows investment properties
• Seller concessions: FHA allows 6% seller concessions vs 3-6% for conventional

When FHA Makes Sense

• Credit score 580-679: Conventional rates are poor; FHA's lower rate + MIP may still be cheaper
• Can't reach 20% down: If you'll never reach 20% in the near term, FHA's MIP-for-life is less of a penalty
• Need seller concessions: FHA allows up to 6% seller help with closing costs
• Gift down payment: FHA accepts 100% gift; some conventional loans have stricter rules
• Condo: FHA has an approved condo list; some buildings not approved for conventional loans

How to Cancel FHA MIP

• Refinance to conventional: Once you reach 80% LTV, refinance and cancel PMI. This is the most common strategy
• Reach 22% equity: If you started with 10%+ down, FHA MIP cancels after 11 years
• Appraisal increase: If home value increases enough to reach 78% LTV, you can request cancellation