FHA loans are backed by the Federal Housing Administration and are designed for buyers with lower credit scores or smaller down payments. The tradeoff: you pay an upfront mortgage insurance premium (MIP) of 1.75% and an annual MIP that typically lasts the life of the loan. Use this calculator to see your full monthly payment and compare true costs against a conventional loan.
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MIP (Mortgage Insurance Premium) is FHA's version of PMI. It has two parts: an upfront MIP of 1.75% of the loan amount (added to your balance at closing) and an annual MIP of 0.55%–1.05% divided into monthly payments. Unlike conventional PMI, FHA MIP typically lasts the life of the loan if you put less than 10% down.
Can I remove MIP from an FHA loan?
If you put 10% or more down on an FHA loan, MIP is automatically removed after 11 years. If you put less than 10% down, the only way to remove MIP is to refinance into a conventional loan once you have 20% equity.
Is the FHA interest rate lower than conventional?
FHA rates are often slightly lower than conventional rates for the same credit profile, but when you factor in the annual MIP, the total monthly cost is usually higher than a conventional loan with PMI for buyers with good credit.
What is the FHA loan limit in 2025?
The standard FHA loan limit is $524,225 for a single-family home in most counties. High-cost areas can go up to $1,209,750. You can check your county's specific limit on the HUD website.
Can I use an FHA loan to buy any type of home?
FHA loans can be used for single-family homes, 2–4 unit properties (if you live in one), condos (FHA-approved complexes only), and manufactured homes. They cannot be used for investment properties or vacation homes.