This FHA loan calculator calculates both your monthly payment on a FHA mortgage and the required  salary based on the debt to income ratios so that to know how much you can borrow. There is in depth information about this loan type below the form.

Mortgage loan amount:*
Loan term:*
Annual interest rate:*
Annual tax value:
Other monthly debts:
Front-end ratio (%):*
Back-end ratio (%):*

What you need to know about FHA loans?

An FHA loanis a mortgage which is insured by the Federal Housing Administration, a government agency within the U.S. Department of Housing and Urban Development that requires borrowers to pay for mortgage insurance as a protection measure for lenders in case of a default; while requiring a lower down payment from the borrower.

As a result of paying such a mortgage insurance lenders offer attractive interest rates on FHA loans and less restrictive qualification requirements.

Here’s what you need to know about FHA loans:

  • It is an attractive solution for people that do not have the cash needed for a standard down payment between 5% and 20% or more, but as well by borrowers with a too high Debt to Income ratio that are considered ineligible for a standard mortgage.

  • You must have worked for the same employer for at least 2 years.

  • In regard of credit scores needed in order to get approved for a mortgage with a down payment of 3.5% you need a credit score at least equal to 580 or higher. Borrowers having scores between 500 and 579 can get mortgage with a 10% down payment, while those with a level below 500 are not eligible for an FHA loan.

  • You must have a valid Social Security number and be of legal age to sign a mortgage agreement.

  • In case of FHA loans the borrower has to pay two types of mortgage insurances: one is the upfront premium which is 1.75% of the loan amount. As this is paid in full when the loan is taken it can be financed as part of the loan amount. The other one is the annual insurance premium that is paid on a monthly basis, while its level depends on the length of the loan, the amount taken and on the loan-to-value ratio. As updated on January 2015 the mortgage insurance premium level are presented here:

- 15-year loan term, LTV (Loan To Value) up to 90 percent : 0.45% annually

- 15-year loan term, LTV greater than 90 percent : 0.70% annually

- 30-year loan term, LTV less than, or equal to, 95 percent : 0.80% annually

- 30-year loan term, LTV greater than 95 percent : 0.85% annually.

  • FHA loans should be taken through approved lenders, while the fees, costs and services offered by lenders will vary from one entity to another. Thus it is critical that the borrower checks those aspects before signing the contract.

In case you analyze the possibility of taking such a loan you can use make use of this FHA loan calculator that returns the following information:

  • Monthly mortgage payment (principal + interest) value.

  • Total housing payment (mortgage + tax) amount.

  • Total monthly payment (total housing payment + other debts) figure.

  • Required monthly salary.

  • Required annual salary.

  • Debt to income ratio used.

09 Apr, 2015