An FHA loan gets pitched as the easy path into homeownership — low down payment, forgiving credit requirements — and for a lot of buyers, that’s exactly what it is. What often gets left out of the pitch is mortgage insurance premium (MIP), a cost that’s baked into every FHA loan and can add more to your monthly payment than people expect. Our FHA Loan Calculator is built to show that full number upfront, not just the principal and interest, so there’s no surprise once you’re actually under contract.
| Monthly Principal & Interest | $0.00 |
| Extra Payment | $0.00 |
| Property Taxes | $0.00 |
| Homeowner’s Insurance | $0.00 |
| Annual MIP | $0.00 |
| HOA Fees | $0.00 |
| Total Monthly Payment | $0.00 |
| ● Down Payment & One-time Expenses | $0.00 |
| ● Principal (incl. UFMIP) | $0.00 |
| ● Upfront MIP (1.75%) | $0.00 |
| ● Extra Payments | $0.00 |
| ● Interest | $0.00 |
| ● Taxes, MIP, Insurance & Fees | $0.00 |
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Download OR share a custom link to your mortgage calculation (with all your numbers pre-filled)
If you haven’t compared this against a conventional loan yet, it’s worth running the same numbers through our main mortgage calculator first — seeing both side by side makes the FHA trade-offs a lot clearer.
Who FHA Loans Are Actually Built For
FHA loans are backed by the Federal Housing Administration, which means the government insures the lender against default — not you. That backing is what lets lenders approve borrowers who might not qualify for a conventional loan:
- Down payment as low as 3.5%, if your credit score is 580 or above
- Credit scores down to 500 may still qualify, though with a 10% minimum down payment
- Debt-to-income ratios up to roughly 50% for borrowers with strong compensating factors, well above what most conventional lenders allow
- Gift funds from family are commonly accepted toward the down payment, with fewer restrictions than some conventional programs
That flexibility is exactly why FHA loans remain popular with first-time buyers and anyone rebuilding credit — but it comes at a cost that a conventional loan with 20% down simply doesn’t carry.
2026 FHA Loan Limits
FHA loan limits are set annually and vary by county, based on local home prices. For 2026, the limits are:
| Area Type | 2026 Loan Limit (Single-Family) |
|---|---|
| Standard-cost counties | $541,287 |
| High-cost counties (e.g., parts of California, New York, Massachusetts) | Up to $1,249,125 |
If the home you’re eyeing runs above your county’s limit, an FHA loan won’t cover it — at that point, a conventional or jumbo loan becomes the only option, which is worth checking against our Affordability Calculator before you fall in love with a specific listing.
The Real Cost of MIP
This is the part FHA borrowers most often underestimate. Unlike conventional PMI, which typically drops off once you hit 20% equity, FHA mortgage insurance follows stricter rules — and on loans with less than 10% down, it usually sticks around for the life of the loan.
| MIP Type | 2026 Rate | When It’s Charged |
|---|---|---|
| Upfront MIP | 1.75% of the base loan amount | One time, at closing (commonly rolled into the loan) |
| Annual MIP (under 5% down) | 0.55% of the loan balance | Divided monthly, added to your payment |
| Annual MIP (5%+ down) | 0.50% of the loan balance | Divided monthly, added to your payment |
What that looks like in dollars: On a $300,000 FHA loan with 3.5% down, the upfront MIP runs a bit over $5,000, and the annual MIP adds roughly $130–$140 to the monthly payment. Put down 10% or more, and annual MIP can end automatically after 11 years — anything less, and it typically runs for the full 30-year term unless you refinance out of it.
FHA vs. Conventional: Which Costs Less Over Time?
There’s no universal answer here — it depends on your credit score, down payment, and how long you plan to keep the loan. As a general pattern, though:
- Lower credit or smaller down payment? FHA usually wins, since conventional lenders price riskier borrowers with higher rates that can outweigh MIP costs.
- Strong credit and at least 10–20% down? Conventional often comes out ahead long-term, since PMI on a conventional loan can be canceled, while FHA’s annual MIP frequently can’t.
- Planning to stay in the home for decades? The permanent MIP on a low-down-payment FHA loan adds up significantly over 30 years — worth mapping out in our Amortization Calculator before deciding.
If You’ve Served, VA Loans Are Worth Checking First
If you’re a veteran, active-duty service member, or eligible spouse, it’s worth pausing before defaulting to FHA. VA loans allow qualified borrowers to buy with 0% down and no mortgage insurance at all — a combination that usually beats FHA outright when you’re eligible. Our VA Loan Calculator can show you the comparison directly.
Already Have an FHA Loan?
If rates have dropped since you closed, or your home has built enough equity to hit 20%, refinancing out of an FHA loan into a conventional one is one of the most common ways to shed MIP for good. Run your current balance through our Refinance Calculator to see whether the math works in your favor once closing costs are factored in.
And if you’re still deciding whether buying makes sense at all right now versus continuing to rent, our Rent vs. Buy Calculator is a useful gut-check before you commit to a 3.5%-down FHA loan and years of MIP payments.
An FHA loan can be the right call for a lot of buyers — the low barrier to entry is real. Just make sure the number you’re comparing against a conventional loan includes MIP, not just principal and interest, since that’s usually where the two options actually diverge.