July 7, 2021
The short answer is, “YES”, you DO need an FHA loan calculator. But which one to use?
There are multiple types of home loan calculators–they all have important functions. But many seeking FHA loans won’t need to use all of them or even most of them. You might just need a little extra information for planning and saving purposes.
The FHA Loan Calculator
The FHA home loan calculator uses the numbers you provide about your income, hazard insurance, mortgage insurance, property taxes, the term of your loan, and other information to help you arrive at an estimate of the monthly payments you could be making (principal and interest rate combined) and the maximum loan amount you might qualify for on a 15-year or 30-year loan (estimates only and not a guarantee).
Enter all information into the calculator including (but not limited to) your monthly payments, monthly income and expenses, and remember to keep it MONTHLY–do not use the amount of your annual expenses and earnings, as this will give you inaccurate results.
Also, don’t forget that you’ll be required to either pay the UpFront Mortgage Insurance Premium for an FHA mortgage or include it into the loan amount, which can also affect your monthly mortgage payments.
Remember to factor in a down payment when making these FHA mortgage calculations. The amount you put down will reduce the overall loan amount. If you can’t estimate your down payment at the moment, plan on making the minimum required down payment possible depending on the type of loan you seek–at least for the purpose of running the calculator.
The “How much can I borrow?” calculator can help you estimate the amount of your monthly mortgage payment–you will want to know this information ahead of your budgeting and loan planning efforts. Remember, you won’t just save for your down payment, but also closing costs and other fees.
Renting Versus Buying
Want to estimate how much you might save when you own your own home rather than renting out somebody else’s property?
The Rent Versus Buying home loan calculator is a good tool to use, but some prep time is necessary–you will need to have information including the amount of any renter’s insurance you carry, plus the amount of any proposed homeowner insurance plus a realistically projected purchase price.
Refinance Calculator
How early is too early to consider refinancing your home loan? That depends on variables such as your goals and your financial needs. If you know you won’t stay in the home very long, it is never too early to start planning your refinance loan–it’s similar to the idea that you want to start working on your credit scores as early as possible. The more time you give yourself, the better off you’ll be when it’s time to commit.
A refinance calculator can tell you early in the planning stages if it makes sense to apply or whether you should look at alternatives. But how?
It does this by helping you think about your refinance loan costs both up front and over the full term of the mortgage. Is your goal is to save money over the lifetime of the current loan? Or over the lifetime of your refinance loan? You will need to run these numbers to help you make the best decision about a refi loan.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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