FHA Mortgage Insurance Premium Calculator

Introduction to FHA mortgage insurance premiums

An FHA-insured mortgage is not cheap money with a government stamp on it; it is ordinary lender money wrapped in an insurance policy that the borrower pays for. The Federal Housing Administration accepts credit profiles and down payments that the conventional market prices out, and in exchange it charges every borrower two distinct premiums that flow into the Mutual Mortgage Insurance Fund. The first is the upfront mortgage insurance premium, or UFMIP, a one-time charge of 175 basis points of the base loan amount that is usually financed into the mortgage rather than paid in cash at the closing table. The second is the annual mortgage insurance premium, universally shortened to MIP, which is billed in twelve monthly instalments alongside principal, interest, taxes and hazard insurance.

The two premiums behave very differently and are frequently confused, including by loan officers in casual conversation. UFMIP is a fixed percentage that does not vary with credit score, loan-to-value ratio or term. Annual MIP is a rate grid: HUD publishes a table keyed to the mortgage term, the loan-to-value ratio at origination and the size of the base loan amount relative to the national conforming loan limit. That grid also determines something borrowers care about far more than the rate itself, which is how long the premium lasts. Some FHA loans shed the annual premium after eleven years. Others carry it for the entire thirty-year term, which on a mid-sized purchase can mean well over thirty thousand dollars of insurance paid on top of interest.

This calculator implements both halves faithfully. It looks the annual rate up in the grid published by Mortgagee Letter 2023-05, applies the correct duration rule, and then computes the monthly premium the way HUD's own servicing documentation specifies: from the average outstanding principal balance of each amortization year, not from a frozen original balance. That distinction matters. A calculator that multiplies the original loan amount by the annual factor overstates the premium in every year after the first, and the error compounds over a thirty-year horizon.

How to use this FHA MIP estimator with a real loan estimate

Work from a Loan Estimate or a purchase contract rather than from memory, because two of the inputs are legally defined terms rather than casual descriptions.

1. Home price. Enter the lesser of the contract sales price and the appraised value. FHA computes loan-to-value against that lesser figure, so on a low appraisal the appraised value is the number that belongs here.
2. Down payment. Enter the borrower's cash investment in dollars. For a purchase, FHA requires a minimum investment of 3.5% of the adjusted value for borrowers with a decision credit score of 580 or above, which caps base LTV at 96.50%.
3. What-if down payment slider. Drag the slider to move the down payment between 3.5% and 25% of the home price. Everything recomputes live, which is the fastest way to see where the loan crosses the 90.00% LTV line that switches annual MIP from life-of-loan to eleven years.
4. Interest rate. Enter the note rate, not the APR. The note rate drives the amortization schedule, and the amortization schedule drives the average outstanding balance that the premium is charged on.
5. Loan term. The MIP grid has only two term buckets, more than 15 years and 15 years or less, but the term still changes how quickly the balance amortizes and therefore how quickly the premium shrinks.
6. UFMIP handling. Choose whether the upfront premium is financed into the mortgage or paid in cash at closing. Financing it raises the amount borrowed and the principal and interest payment, and it also triggers the divide-by-1.0175 adjustment in HUD's monthly premium formula.
7. FHA case number year. The base loan amount threshold in the grid follows the national conforming loan limit for the year the case number was assigned, so pick the year that matches your file.

Press Calculate FHA premiums and the page returns the base loan amount, the LTV, the annual rate in basis points, the premium duration, the upfront premium, the first-year monthly MIP, and the total insurance cost over the life of the policy. Below that you get a year-by-year schedule, a chart of the monthly premium against the cancellation point, and a downloadable CSV. The address bar is also updated with a shareable link that reproduces the scenario.

The annual MIP rate grid from Mortgagee Letter 2023-05

Mortgagee Letter 2023-05, issued 22 February 2023 and effective for case numbers endorsed on or after 20 March 2023, cut annual MIP by 30 basis points for most programmes and simultaneously amended the base loan amount threshold so that it tracks the national conforming loan limit rather than a hard-coded dollar amount. The letter states the tables as follows.

The threshold itself is the FHFA baseline conforming loan limit for one-unit properties in the year the case number is assigned: $726,200 for 2023, $766,550 for 2024, $806,500 for 2025 and $832,750 for 2026. Streamline and simple refinances of FHA loans endorsed on or before 31 May 2009 sit outside this grid entirely, paying 1 basis point of UFMIP and 55 basis points of annual MIP, and Section 247 Hawaiian Home Lands mortgages pay no annual MIP at all. This calculator prices standard Title II forward purchase and rate-and-term scenarios.

The FHA MIP formula, step by step

Start with the base loan amount, which for a purchase is the adjusted value less the borrower's cash investment. Financed UFMIP is deliberately excluded from it.

where V is the lesser of contract sales price and appraised value and D is the down payment. The loan-to-value ratio that selects the rate row is measured on that same base amount, expressed as a percentage and compared against the grid bands to two decimal places.

The upfront premium is a flat 175 basis points of the base loan amount for every standard Title II forward mortgage:

If the borrower finances that premium, the amount actually amortized, which HUD calls the original mortgage amount, becomes:

That original mortgage amount is amortized with the ordinary level-payment annuity formula, using the monthly rate i and the number of scheduled payments n:

Here is the step most calculators skip. HUD does not charge the annual factor against the original balance. Its published monthly premium computation, in force since 1 May 1998, takes the average of the twelve scheduled balances in each amortization year:

The annual premium is that average multiplied by the rate from the grid. When UFMIP was financed the result is divided by one plus the upfront factor, which removes the financed premium from the insured base so that the borrower is not paying annual insurance on the upfront insurance. Both intermediate results are rounded to cents.

Finally, the lifetime cost of the annual premium is the sum over the duration T that the grid assigns, either eleven years or the full mortgage term:

The calculator reproduces HUD's own published worked example exactly. For an original mortgage amount of $106,605 at 7.50% over 30 years with a 0.005 annual factor and a 0.0225 upfront factor, the routine returns an average outstanding balance of $106,160.65, an annual premium of $519.12 and a monthly premium of $43.26, which are the figures HUD prints.

A worked example: $360,000 purchase with 3.5% down

Take a buyer purchasing at $360,000 with an appraisal that comes in at value, a 3.5% down payment of $12,600, a 6.25% note rate, a 30-year term, UFMIP financed, and a 2026 case number.

• Base loan amount: $360,000 − $12,600 = $347,400.
• LTV: 347,400 / 360,000 = 96.50%, which is the FHA maximum for a 580-plus credit score.
• Base loan is below the 2026 threshold of $832,750, term exceeds 15 years, LTV exceeds 95.00%, so the grid returns 55 basis points for the mortgage term.
• UFMIP: 347,400 × 0.0175 = $6,079.50. Financed, the original mortgage amount becomes $353,479.50.
• Principal and interest at 6.25% over 360 months: $2,176.43.
• Year one average outstanding balance: $351,602.45. Applying 55 bps gives $1,933.81, divided by 1.0175 gives $1,900.55, so the first-year monthly MIP is $158.38.
• Because the LTV exceeded 90.00%, the premium runs the full 30 years. Summing the declining annual premiums gives $37,192.80, and adding UFMIP brings total FHA insurance to $43,272.30.

Now move the same buyer to a 10% down payment of $36,000. The base loan falls to $324,000, the LTV lands exactly on 90.00%, the rate drops to 50 basis points and, decisively, the duration drops to 11 years. First-year monthly MIP falls to $134.28, the eleven-year premium total is $16,414.44, and with a $5,670.00 UFMIP the lifetime insurance cost is $22,084.44. The extra $23,400 of down payment buys $21,187.86 of avoided insurance in addition to the interest saved on a smaller balance. That is the single most consequential decision an FHA borrower makes, and it is invisible unless the duration rule is modelled.

Interpreting the result and the 11-year cancellation test

Read the duration line first. FHA cancellation is not the conventional private mortgage insurance rule that borrowers half-remember. Conventional PMI must be terminated automatically when the scheduled balance reaches 78% of original value under the Homeowners Protection Act. FHA annual MIP has no such automatic termination for loans priced under the current grid. Duration is fixed at origination by the original LTV: at or below 90.00% the premium stops after 11 years, and above 90.00% it persists for the entire mortgage term. Extra principal payments accelerate payoff and shrink the average outstanding balance a little, which trims the premium, but they cannot convert a life-of-loan policy into an eleven-year one.

Second, read the total. The upfront premium is small relative to the accumulated annual premium on a high-LTV thirty-year loan, so an FHA-versus-conventional comparison that only counts UFMIP is badly incomplete. Third, treat the first-year monthly figure as the peak. Because the premium is priced off a declining average balance, the monthly amount falls each year, gently on a 30-year loan and sharply on a 15-year one. Servicers re-strike the escrowed premium annually, so the payment quoted at closing will not be the payment in year ten.

Finally, use the chart and the schedule together. The chart draws the monthly premium year by year and marks the cancellation point, so the shape of the obligation is visible at a glance. The schedule gives the underlying numbers, including the average outstanding balance HUD would use, and can be exported to CSV for a spreadsheet comparison against a conventional quote with borrower-paid PMI.

Limitations, assumptions and cases outside this model

The estimator makes several assumptions that are reasonable for standard purchase scenarios and wrong for others. It assumes a fixed-rate, fully amortizing Title II forward mortgage with no interest-only period, no buydown, no prepayment and no forbearance. HUD's rule for adjustable-rate mortgages is to keep using the original interest rate and the original principal and interest payment through all years, which is what this page does when you enter the initial rate, but it means an ARM whose rate rises will still show the original schedule. Graduated payment and growing equity mortgages use amortization plans that are not modelled here.

Streamline refinances and simple refinances of FHA loans endorsed on or before 31 May 2009 use a completely separate schedule of 1 basis point UFMIP and 55 basis points annual MIP; Section 247 Hawaiian Home Lands mortgages charge no annual MIP and a different UFMIP scale; Section 248 Indian Lands mortgages charge no UFMIP. Section 203(k) rehabilitation loans price MIP on the same grid but their base loan amount includes rehabilitation costs and contingency reserves that this page does not itemise. Energy Efficient Mortgage and Solar and Wind add-ons likewise change the base loan amount.

The calculator also does not test FHA eligibility. It does not check county loan limits, debt-to-income ratios, the decision credit score bands that set the minimum investment at 3.5% or 10%, seasoning requirements, or the maximum LTV for cash-out refinances. It will warn when the implied LTV exceeds 96.50%, but a scenario that passes the arithmetic can still be ineligible. Nor does it model the partial UFMIP refund available on an FHA-to-FHA refinance within three years, property taxes, hazard insurance, HOA dues or the interest cost of financing the upfront premium. Results are an estimate for planning; the binding numbers are the ones on your Loan Estimate and Closing Disclosure from an FHA-approved mortgagee.

Common questions about FHA mortgage insurance premiums

Sources. Rate grid, UFMIP factor, LTV bands and premium duration: U.S. Department of Housing and Urban Development, Mortgagee Letter 2023-05, Reduction of Federal Housing Administration (FHA) Annual Mortgage Insurance Premium (MIP) Rates, 22 February 2023, effective for case numbers endorsed on or after 20 March 2023 (hud.gov), incorporated into FHA Single Family Housing Policy Handbook 4000.1, Appendix 1.0 Mortgage Insurance Premiums. Monthly premium computation from the annual average outstanding balance, including the divide-by-(1 + upfront factor) step and the worked example reproduced above: HUD, Monthly (Periodic) Mortgage Insurance Premium Calculation (hud.gov), the formula effective 1 May 1998 per Mortgagee Letter 98-22. Base loan amount thresholds: Federal Housing Finance Agency, Conforming Loan Limit Values announcements for 2023 through 2026 (fhfa.gov); the 2026 baseline one-unit limit is $832,750. FHA 2026 forward loan limits: HUD press release HUD No. 25-145.