1. What is FHA Loan With PMI?

FHA loans are government-backed mortgages insured by the Federal Housing Administration. Private Mortgage Insurance (PMI) is required on FHA loans when the down payment is less than 20% of the home's value.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Standard \) — Principal and interest payment
• \( PMI \) — Private Mortgage Insurance payment

Explanation: The standard payment is calculated using the standard loan amortization formula, while PMI is calculated as a percentage of the loan amount.

3. Importance of PMI Calculation

Details: Understanding your total monthly payment including PMI is crucial for budgeting and determining how much house you can afford with an FHA loan.

4. Using the Calculator

Tips: Enter the loan amount, interest rate, loan term in years, and PMI rate (default is 0.85% for FHA loans). All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How long do I pay PMI on an FHA loan?
A: For FHA loans, you typically pay PMI for the life of the loan unless you refinance to a conventional loan.

Q2: What's the typical PMI rate for FHA loans?
A: FHA loans typically have PMI rates between 0.45% to 1.05% of the loan amount annually.

Q3: Can I avoid PMI on an FHA loan?
A: No, all FHA loans require mortgage insurance, though you can avoid it by making a 20% down payment on a conventional loan.

Q4: How does PMI affect my monthly payment?
A: PMI typically adds 0.5% to 1% of the loan amount to your annual costs, divided into monthly payments.

Q5: When can I remove PMI from my loan?
A: For conventional loans, you can request PMI removal when you reach 20% equity. For FHA loans, PMI stays for the loan term unless you refinance.