How This Calculator Works
This tool computes the full housing payment lenders underwrite — PITIA: Principal, Interest, Taxes, Insurance, and Association fees — plus the mortgage insurance rules specific to each loan program. Every figure updates instantly in your browser; nothing is sent to a server.
The amortization formula
Monthly principal and interest are calculated with the standard amortization formula:
M = P × [ r(1+r)ⁿ ] ÷ [ (1+r)ⁿ − 1 ]
where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments (term in years × 12).
FHA rules applied automatically
- Upfront MIP (UFMIP): 1.75% of the base loan amount is added to your loan balance, so you pay interest on it for the life of the loan.
- Annual MIP: 0.55% per year when your down payment is under 10% (0.45% at 10%+), paid monthly. With under 10% down, MIP never cancels; with 10%+ down, it ends after 11 years.
- Self-sufficiency test: select 3 or 4 units and the calculator checks whether 75% of total market rent covers the full PITIA — HUD's requirement for FHA financing on 3-4 unit properties.
Conventional PMI rules
With less than 20% down, the calculator applies an estimated 0.6% annual PMI rate (your actual quote depends on credit score and LTV) and computes the exact month your balance reaches 80% LTV — the point where you can request PMI removal in writing. That drop-off month is the single biggest long-term cost difference between conventional and FHA financing.
VA rules
VA loans carry no monthly mortgage insurance. The calculator adds the first-use funding fee (2.15% with zero down) to the loan balance, matching how the VA finances it.
Upfront cash and rental offset
Cash needed to close is estimated as your down payment plus 3% of the purchase price for closing costs and prepaids — a realistic planning figure for most markets. Net out-of-pocket cost subtracts the rent you expect to collect from the other unit(s), which is the number that matters when comparing a house hack against renting.
Worked Example
A $350,000 duplex with 3.5% down FHA financing at 6.5%: the base loan of $337,750 becomes $343,661 after the $5,911 UFMIP. Principal and interest run about $2,172/month, MIP adds roughly $157, and with $420/month in taxes and $150 in insurance the total PITIA is about $2,899. Collecting $1,400 from the second unit drops your net out-of-pocket cost to roughly $1,499/month — often less than renting a smaller apartment.
Frequently Asked Questions
How accurate is the estimated PMI rate?
Conventional PMI is risk-priced: expect roughly 0.3%-1.0% of the loan amount per year depending on credit score and down payment. The 0.6% default is a middle-of-road estimate; replace it with a real quote before making offers.
Does the rental income count toward loan qualification?
Lenders typically count 75% of the appraiser's market rent estimate toward your qualifying income on a 2-4 unit purchase. The rental offset field here models your cash-flow reality; see our guide on using rental income to qualify for the underwriting rules.
Why is my FHA payment higher than a conventional quote?
FHA's 1.75% upfront fee is financed into the loan, and annual MIP rarely cancels. Compare both programs on the same property using the loan type selector — the conventional option usually wins long-term if you have a 640+ credit score.