How Much Is My FHA Loan Monthly Mortgage Payment?
October 12, 2023
First-time homebuyers often ask how much they should expect to pay when their monthly FHA mortgages begin. But the answer isn’t as easy as dividing the sale price of the house by the number of months on the loan term.
It’s important to know how much you are committing to, but it’s just as important to approach the question the way your lender will. And that means determining how much of your income is taken up by your housing expenses and overall debt.
How Much Is My FHA Mortgage Payment Every Month?
Why can’t you simply divide the price of the home by an FHA loan term of 15 or 30 years to get an idea of how much you’ll pay every 30 days? Because your mortgage is comprised of multiple factors:
There’s more than one way to approach this question, and there are multiple schools of thought, including the ones below:
28% Rule for Gross Income
Some feel financially qualified borrowers should respect a 28% limit for gross income (pre-tax) for a mortgage. If you use more than 28% of your gross income, you might be getting in over your head, according to this school of thought.
There’s an article by Time Magazine that notes that the 28% limit “...should account for every element of your home loan (e.g., principal, interest, taxes, and insurance). If you and your spouse earn $10,000 per month gross, for example, your full housing payment should be no more than $2,800.”
28% / 36% Rule
Similar to the approach above but with further modifiers, which include allowing no more than 36% of the borrower’s pre-tax gross income to be used to pay monthly debts.
35% / 45% Rule
The Time Magazine piece on mortgage debt referenced above also includes an aside on the 35% / 45% rule.
According to Time, a borrower’s housing costs should total no more than 35% of your gross income “or more than 45% of your net income after you pay taxes.”
If you feel uncertain about how much you are committing to on a mortgage loan and how those costs will affect your ability to pay for the loan down the road, consider discussing your needs and concerns with a participating FHA lender. You can also get help from the FHA by calling them at 1-800 CALL FHA.
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It’s important to know how much you are committing to, but it’s just as important to approach the question the way your lender will. And that means determining how much of your income is taken up by your housing expenses and overall debt.
How Much Is My FHA Mortgage Payment Every Month?
Why can’t you simply divide the price of the home by an FHA loan term of 15 or 30 years to get an idea of how much you’ll pay every 30 days? Because your mortgage is comprised of multiple factors:
- Principal FHA loan balance
- FHA loan interest rate
- Homeowners insurance premiums
- Annual property taxes
- Mortgage insurance payments
There’s more than one way to approach this question, and there are multiple schools of thought, including the ones below:
28% Rule for Gross Income
Some feel financially qualified borrowers should respect a 28% limit for gross income (pre-tax) for a mortgage. If you use more than 28% of your gross income, you might be getting in over your head, according to this school of thought.
There’s an article by Time Magazine that notes that the 28% limit “...should account for every element of your home loan (e.g., principal, interest, taxes, and insurance). If you and your spouse earn $10,000 per month gross, for example, your full housing payment should be no more than $2,800.”
28% / 36% Rule
Similar to the approach above but with further modifiers, which include allowing no more than 36% of the borrower’s pre-tax gross income to be used to pay monthly debts.
35% / 45% Rule
The Time Magazine piece on mortgage debt referenced above also includes an aside on the 35% / 45% rule.
According to Time, a borrower’s housing costs should total no more than 35% of your gross income “or more than 45% of your net income after you pay taxes.”
If you feel uncertain about how much you are committing to on a mortgage loan and how those costs will affect your ability to pay for the loan down the road, consider discussing your needs and concerns with a participating FHA lender. You can also get help from the FHA by calling them at 1-800 CALL FHA.
------------------------------
RELATED VIDEOS:
Homebuyers Benefit From the Work Done by Fannie Mae
HUD 4000.1 is Sometimes Called the FHA Handbook
Credit History Is Presented as Your FICO Score
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