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Due to the government guarantee and lenient requirements, the FHA loan is one of the most preferred home loan choices for home buyers. If you are a first-time homebuyer or someone who has not owned a home in the last three years, this home loan program can help you realize your dream of homeownership.
But before applying for this loan, you would like to know your home affordability. And an FHA loan calculator Texas can let you know this based on some inputs. Do you know what the inputs are? Well, here, we have listed down a few for you –
- FHA mortgage insurance
FHA requires a monthly fee, which is a lot like private mortgage insurance. Known as FHA Mortgage Insurance Premium (MIP), this fee is a type of insurance, which protects lenders against loss in case the borrower fails to make the payment. Generally, the FHA MIP rate is 0.85% of the loan amount per year. However, it can vary based on the loan amount, as well as a down payment.
- Property tax
The country or municipality in which the home is located charges a certain amount per year in taxes. This cost is divided into 12 instalments. Besides, it is collected each month with your mortgage payment. Your mortgage lender collects this fee because the country can seize a house if the property taxes are not paid on time.
- Homeowners insurance
Lenders require you to insure your home from fire and other damages. Along with your mortgage payment, this fee is collected. And the mortgage lender sends the payment to your insurance company each year.
Thinking about buying a condo? Or do you want to buy a home in a Planned Unit Development (PUD)? Whatever it may be, you need to pay homeowners association (HOA) dues. When deciding your ratios, the mortgage lenders factor is this cost. You may put in other home-related fees including flood insurance in this field, however, don’t include things like utility costs.
- Down payment
It is the basic payment that homeowners need to make to the lenders when they buy a home on credit. Generally, borrowers need to come with a certain percentage of the total cost of the home as a down payment. The lowest down payment requirement for an FHA loan is 3.5%. But higher down payment amounts are always welcomed by FHA lenders. You can opt for down payment assistance programs or accept gift money for this down payment. With a higher down payment, you need to borrow less. So, you can get loan approval easily.
Besides, principal, interest rate and upfront fee are other costs that are related to this calculator. So, give the inputs and know your home affordability effectively.