3.5% Down โ 800K+ FHA Loans Annually
FHA loans help 800,000+ Americans buy homes annually with just 3.5% down โ the lowest down payment of any major loan program. But MIP adds 1.75% upfront + 0.55% annually.
Why This Matters for Your Finances
Why: FHA loans help 800,000+ Americans buy homes annually with the lowest down payment of any major program. But the hidden cost is MIP: 1.75% upfront + 0.55% annually, often for the life of the loan. On a $350K home, that is $6,125 upfront + $1,740/year. Many buyers start FHA then refinance to conventional at 20% equity.
How: Enter home price, down payment (3.5% min with 580+ credit, 10% for 500-579), credit score, rate, and term. Add property taxes and insurance. The calculator shows monthly payment, MIP, total cost, qualification status, and FHA vs conventional comparison.
- โ10% down means MIP drops after 11 years instead of loan life.
- โRefinance to conventional once you reach 20% equity to eliminate insurance.
- โFHA accepts credit scores as low as 500 (10% down) or 580 (3.5% down).
- โStreamline refinance lets existing FHA borrowers lower rate with minimal paperwork.
๐ Example Scenarios โ Click to Load
Loan Details
Monthly Payment Breakdown
Total Cost Over Time
FHA vs Conventional Comparison
Amortization Schedule (First Years)
โ ๏ธFor educational purposes only โ not financial advice. Consult a qualified advisor before making decisions.
๐ก Money Facts
3.5% minimum down payment with 580+ credit โ lowest of any major program
โ HUD
800,000+ FHA loans originated annually
โ FHA
1.75% upfront MIP + 0.55% annual โ often for life of loan
โ FHA
10% down = MIP drops after 11 years; under 10% = MIP for loan life
โ CFPB
FHA loan limits: $524K base, up to $1.2M in high-cost areas
โ HUD
Streamline refinance: minimal paperwork, no appraisal for rate reduction
โ FHA
FHA loans help 800,000+ Americans buy homes annually with just 3.5% down โ the lowest down payment of any major loan program. But the hidden cost is MIP (Mortgage Insurance Premium): 1.75% upfront + 0.55% annually for the LIFE of the loan (unless you put 10%+ down). On a $350K home, that is $6,125 upfront + $1,740/year. Many buyers start FHA then refinance to conventional once they reach 20% equity.
๐ Sources
๐ FHA Loan Benefits
- โข Low down payment: 3.5% with 580+ credit
- โข Flexible credit: Accepts scores as low as 500
- โข Gift funds allowed for down payment
- โข Assumable loans: Can transfer to qualified buyers
- โข Streamline refinance: Simplified refi process
โ๏ธ FHA vs Conventional
| Feature | FHA | Conventional |
|---|---|---|
| Min Down | 3.5% | 5-20% |
| Min Credit | 500-580 | 620+ |
| Insurance | MIP (life of loan) | PMI (removable at 20%) |
| DTI | Up to 57% | Up to 45% |
๐ FHA Streamline Refinance
FHA streamline refinance lets existing FHA borrowers lower their rate with minimal paperwork. No appraisal or credit check required for the rate reduction option. You must have on-time payments. Great for borrowers who want to reduce their monthly payment without a full refinance.
๐ When MIP Drops Off
With 10%+ down, FHA MIP automatically cancels after 11 years. With less than 10% down, MIP typically lasts the life of the loan. To remove it earlier, refinance to a conventional loan once you have 20% equity.
๐ก Expert Tips
10% Down = MIP Relief
Putting 10% down means MIP drops after 11 years instead of lasting the full loan term.
Refi When Equity Builds
Once you reach 20% equity, refinance to conventional to eliminate mortgage insurance.
โ FAQ
What are FHA loan requirements?
FHA loans require a minimum credit score of 500 (580 for 3.5% down), a minimum 3.5% down payment for borrowers with 580+ credit, 10% down for credit 500-579, debt-to-income ratio typically under 43%, and the property must be your primary residence. You must also pay upfront and annual MIP (Mortgage Insurance Premium).
What is the FHA loan down payment?
The minimum FHA down payment is 3.5% for borrowers with a credit score of 580 or higher. Borrowers with credit scores between 500-579 must put down at least 10%. The down payment can come from savings, gifts from family, or down payment assistance programs. On a $350K home, 3.5% down equals $12,250.
What is FHA MIP (Mortgage Insurance Premium)?
FHA MIP has two parts: (1) Upfront MIP of 1.75% of the loan amount, paid at closing. (2) Annual MIP of 0.55% (or higher based on down payment and term), divided into 12 monthly payments. For loans with less than 10% down, MIP typically lasts the life of the loan. With 10%+ down, MIP drops off after 11 years.
What are FHA loan limits?
FHA loan limits vary by county. For 2024, the base limit is $524,225 for most areas. High-cost areas like parts of California, New York, and Hawaii have limits up to $1,209,750. Limits are updated annually by HUD based on median home prices.
Disclaimer: This calculator provides estimates. Actual FHA rates, MIP, and limits vary. Consult a licensed mortgage professional. Not financial advice.