1. What is FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration, designed to help lower-income borrowers qualify for home loans with lower down payments and more flexible credit requirements than conventional loans.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( Price \) — Purchase price of the home (USD)
• \( Down \) — Down payment amount (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)

Explanation: The formula calculates the fixed monthly payment required to fully amortize the loan over its term, including both principal and interest.

3. Importance of Accurate Payment Calculation

Details: Understanding your exact monthly payment helps with budgeting and ensures you can comfortably afford the home. FHA loans typically require mortgage insurance which isn't included in this basic calculation.

4. Using the Calculator

Tips: Enter the home price, your planned down payment, current FHA interest rate, and loan term (typically 15 or 30 years). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the minimum down payment for FHA loans?
A: The minimum down payment is 3.5% of the purchase price for borrowers with credit scores of 580 or higher.

Q2: Does this include FHA mortgage insurance?
A: No, this calculates principal and interest only. FHA loans require both upfront and annual mortgage insurance premiums.

Q3: What interest rates do FHA loans have?
A: FHA rates are typically comparable to conventional rates, sometimes slightly lower, but the mortgage insurance makes them more expensive long-term.

Q4: What are FHA loan limits?
A: FHA sets maximum loan amounts that vary by county. In 2023, they range from $472,030 to $1,089,300 in high-cost areas.

Q5: Can I use gift funds for the down payment?
A: Yes, FHA allows the entire down payment to come from gift funds from family, employers, or charitable organizations.