FHA Mortgage Calculator: Increasing the Benefits of your FHA
FHA mortgages are very popular loans and a good FHA mortgage
calculator will help you secure a better FHA loan! A good FHA
calculator can help you sort through all your data in order to make
a better informed financial decision regarding your home purchase.
FHA Mortgage vs Conventional Loans
There are some major differences between an FHA loan and a
conventional loan. These differences can cost you money in
the end if you aren’t careful!
An FHA mortgage calculator can help you see
the full picture!
"FHA loans where instituted in 1937 by Congress
when the Federal Housing Administration was developed in order to
provide a better and fair opportunity for an increased number of
individuals to become home owners."
The Start of FHA Mortgages
As the country was still in the throes of the Great Depression,
this had become an increasingly difficult task as most individuals
could not afford to pay cash for a home or even make the standard
down payment for a home purchase. As a result individuals were then
able to make purchases of single family homes as well as 2, 3 and
4-unit properties in both urban and rural areas. Today, it’s just
as easy to become approved for an FHA mortgage loan as it was
One of the things you need to understand is that
this ease of approval is due to the fact that the risk of the
lender is reduced because the loan is insured by FHA.
This means; however, that you will be charged for mortgage
insurance with an FHA loan in order to cover the insurance FHA
uses to back the loan.
Using an FHA mortgage calculator you can determine how much
your mortgage insurance will cost you.
When using an FHA loan calculator the monthly PMI is .5% on
all FHA loans! You must enter .5% when using your FHA
How Much Can I Afford?
There are specific requirements regarding how much house you can
buy in relation to your earnings with all mortgages.
It can be helpful to use an FHA mortgage
calculator before you start shopping for your home in order to
understand how much you can actually afford.
This can help to prevent a situation in which you fall in love with
a house only to have your dreams shot down when you discover that
you can't afford that home because it doesn’t fall within the
parameters of your affordability guidelines set by FHA.
Below are some tips on information that you will need in order to
determine how much house you can afford using an FHA mortgage
- Purchase price of desired house
- Down payment
- Loan term
- Interest rate
- FHA Mortgage insurance is.5 on all loans; enter this on an FHA
- Closing costs
- Annual property taxes and insurance
Using the data mentioned above, an FHA mortgage
calculator will determine how much house you can afford based on a
maximum ratio of monthly housing expense to income of 29% and a
maximum ratio of total housing expense to income of 41%.
The Big Question: How Much Down Payment?
After you find a home that you both like and can afford, an FHA
mortgage calculator can also be beneficial in determining how
much money you will need to put down on the home. While the down
payment requirements for an FHA mortgage are significantly
less than a conventional mortgage, you will be expected to
make a down payment.
An FHA mortgage calculator can help you determine how much
that amount might be based on the purchase price of the home.
Down the road you might also want to consider using
an FHA mortgage calculator if you are interested in
refinancing your home. This is a popular idea because FHA mortgages
are not subject to prepayment penalties; however before you take
such a big step you would need to determine whether it would be
financially worth it or not to refinance.
So, in the end, there are numerous advantages to
using a FHA mortgage calculator such as:
By taking advantage of the features offered by a FHA Mortgage
Calculator before you sign on the dotted line, you can be sure
that you'll receive the maximum benefit of the advantages
presented by an FHA loan.
- Low down payment - as little as 3% down payment
- Down payment can be a gift from a family member
- Seller can pay up to 6% of sales price for closing costs
- No cash reserves are required
- FHA mortgages are assumable
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