The Home Affordability Calculator defaults to the conventional 28/36 rule. Here’s how to adapt it for FHA limits (31/43) and what that does to down payment, PMI/MIP, and monthly cash flow.
Loan Program Snapshot (2025)
Conventional 5%+ Down
- DTI limits: 28% front-end / 36% back-end (automated approvals up to 45%)
- PMI drops when you reach 78–80% loan-to-value
- Best pricing at 740+ credit; 620 minimum to qualify
FHA 3.5% Down
- DTI limits: 31% / 43% (up to 50% with compensating factors)
- MIP: 1.75% upfront + 0.55% annually (sticks for at least 11 years)
- Credit scores 580+ qualify with 3.5% down
Both programs still follow the 28/36 style framework in our calculator, the FHA option simply allows more of your income to go toward housing.
Example: $90K Income, $600 Monthly Debts
Plugging the numbers into the calculator with 6.75% interest, $1,800/year insurance, and 1.2% property tax:
- Conventional (5% down): Housing limit = $2,100. Max price ≈ $325K, PMI ~$180/month.
- FHA (3.5% down): Housing limit = $2,325. Max price ≈ $355K, MIP adds ~$210/month.
- Net difference: FHA expands buying power by ~$30K at the cost of permanent insurance premiums.
If your other debts are lower, both loan types will unlock more budget, but FHA keeps the edge when down payment savings are the bottleneck.
When Conventional Wins
- You can put 10–20% down and keep ample reserves.
- Your FICO is 680+ and debt profile is clean.
- You want the ability to remove PMI or recast the loan.
- You plan to stay long term and care about total interest paid.
When FHA Wins
- You need the higher 31/43 (or 50%) DTI flexibility.
- You have strong income but limited down payment savings.
- You expect to refinance into conventional once equity/credit improves.
How to Use the Calculator
- Enter income, debts, property tax, insurance, and HOA numbers.
- Run a baseline scenario with 20% down so you see conventional results.
- Lower the down payment to 3.5% and increase the PMI line to 0.55% to simulate FHA MIP.
- Compare the “Max Home Price” line versus your target market price.
- Repeat the inputs with lower debt balances or higher down payments to see how quickly affordability changes.
FAQ
Can I switch from FHA to conventional later?
Yes. Many first-time buyers use FHA to get in the door, then refinance into a conventional loan once they hit 20% equity or improve credit. Run refinance scenarios with the mortgage calculator to see potential savings.
Does PMI/MIP count toward my DTI?
Absolutely. Both PMI and FHA MIP are part of your monthly housing payment, so they’re already included when the calculator enforces the 28/36 or 31/43 ratios.
What about closing costs and reserves?
Lenders want 1–3 months of reserves after closing plus 2–5% in closing costs. Add those to your cash-to-close column so you don’t stretch beyond comfort.