April 6, 2018
How much is my FHA mortgage payment? Many borrowers want to get an estimate to figure out how to budget for a mortgage payment, but it is easy to forget that calculating a home loan payment involves more than just doing the math on the principal and interest and the term of the loan.
How much will your FHA home loan mortgage payment be? Much depends on what applies to your loan besides principal and interest. For example, you will need to learn how much property taxes are in your area, you will need to know what comparable homes are selling for in your chosen housing market, etc.
What’s My Monthly FHA Mortgage Payment?
HUD 4000.1, the FHA loan handbook, spells out all the things that will be included in your mortgage payment calculation. According to HUD 4000.1, the lender is required to do the following in most cases:
“For all transactions, except non-credit qualifying Streamline Refinances, the underwriter must calculate the Borrower’s Total Mortgage Payment to Effective Income Ratio (PTI) and the Total Fixed Payment to Effective Income ratio, or DTI, and verify compliance with the ratio requirements listed in the Approvable Ratio Requirements Chart.The Mortgagee must exclude any obligation that is wholly secured by existing assets of the Borrower from the calculation of the Borrower’s debts, provided the assets securing the debt are also not considered in qualifying the Borrower.”
As mentioned above, this calculation is done to determine that the borrower’s debt-to-income ratio is acceptable, and we see that the lender must use the total mortgage payment, not just the principal and interest to complete those calculations. In the lender’s mind the total monthly mortgage payment may include some or all of the following beyond principal and interest:
- real estate taxes
- hazard insurance
- flood insurance as applicable
- MIP
- HOA or condominium association fees or expenses;
- Ground Rent;
- special assessments, including any assessments related to a PACE obligation;
- payments for any acceptable secondary financing; and
- any other escrow payments.
Use An Online Mortgage Calculator To Help You Estimate Your FHA Loan Payments
Online mortgage loan calculators can be used to help you do several things including estimate the amount of your monthly FHA mortgage payment. Remember that until you get an appraisal done on a property you intend to purchase, this information is an estimate only.
It is important to keep in mind that real estate taxes are the second item in the list above-your lender may require you to pay these taxes via escrow and have funds set aside for this.
For some borrowers this may require additional budgeting and planning ahead. If you need to save up your first year’s income tax payments in advance in order to get ahead, consider that factor when in the planning stages.
There is nothing wrong with delaying your loan application long enough to save up for closing costs and other home loan expenses. Talk to a loan officer or real estate agent to find out approximately what you might need to expect for that first year of property taxes.
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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