How to calculate your FHA mortgage payment

How to calculate your FHA mortgage payment including taxes, home insurance, and monthly mortgage insurance.


Hi

I’m Ron Meyer and I’m a mortgage loan consultant with GSF Mortgage.

Now that you are preapproved for a mortgage and went out and found your dream home, you want to know what your monthly payment is going to be using an FHA mortgage.

We have all seen the ads: “Buy this $200,000 home and your payment is only $850.” You say to yourself, “I can afford that.” But, if you read the fine print, that is actually a principal and interest only payment and assumes you’re putting 20% down. It doesn’t factor in home insurance, real estate taxes, or mortgage insurance.

On all FHA loans, an up front mortgage insurance premium equal to 1% of loan amount is added.

Monthly mortgage insurance premiums will vary depending on the length of the loan and the amount of your downpayment.

For Example

15 yr or less loans
Less than or = to 95% ltv is 25 basis points
Greater than 95% ltv is 50 basis points

20 or 30 year loans
Less than or = to 95% ltv is 110 basis points
Greater than 95% ltv is 115 basis points.

Now, let’s calculate your true monthly payment on that $200,000 home. First, you”ll need a mortgage calculator. You can find one on my website getapprovedfast.com. Click on Mortgage 101, and then select Calculators.

Let’s say your purchase price is $200,000, you’re making a 3.5% downpayment, and your loan is a 30 year fixed rate loan with a 5% rate. Taxes are $4,200 a year (or $350/month) and your home insurance is $600, or $50 per month.

1. purchase price of $200,000
2. 3.5% downpayment
3. 30 year fixed rate at 5%
4. taxes of $4,200 or $350 per month
5. home insurance of $600 or $50 per month

• A purchase price of $200,000 minus a 3.5% downpayment gives you a $193,000 base loan amount.
• Add in 1% up front mortgage insurance by multiplying $193,000 x 101%--your total loan amount is $194,930.
• Based on a 5% rate, your principal and interest payment is $1,046.43.
• Add in monthly mortgage insurance of $183.72 based on 115 basis points
• Figure $350 for taxes, and $50 for home insurance

This makes your total payment $1,630.15 each month—much greater than the $850 described in the ad.

To calculate monthly mortgage insurance, just multiply total loan amount times 1.15 and divide by 12. That is actually a little high but it will get you close. The actual way to calculate is a little confusing for most. If anyone would like to know that exact formula, let me know.

I hope you found this information helpful. If you know of others who would like this information, please email, forward or share it with them.

Ron Meyer
(920) 213-0428
www.gsfron.com
rmeyer@gogsf.com