What to enter
Type in your monthly rent. Pick your county so the property tax estimate matches where you'd buy. Leave the rate at the 5.75% opening rate or enter the one you've been quoted.
Then add your gross monthly income and your monthly debt payments. The first two results (the price and the five-year comparison) need only the rent. The third result, whether you qualify, needs your income and debts.
Running the payment in reverse
The calculator runs the FHA payment in reverse. It starts with your rent as the target payment and solves for the price that produces it.
For FHA with 3.5% down, the full payment has five pieces:
- Principal and interest on 96.5% of the price, plus the 1.75% upfront mortgage insurance premium (UFMIP) added to the loan
- Monthly mortgage insurance (MIP) at 0.55% a year of the base loan
- Property taxes, about 0.95% of the price a year in Broward
- Homeowners insurance, about $283 a month as a Florida starting point
- HOA dues, if any
The five-year comparison is plain arithmetic on one side and an amortization schedule on the other. Rent paid is your rent times 60. Loan paid down is the starting loan balance minus the balance after 60 payments.
The qualifying check uses FHA's limits: the house payment can be up to 46.9% of gross monthly income, and the house payment plus other debts up to 56.9%.
What $2,200 a month in rent buys
At 5.75% in Broward, a $2,200 payment breaks down like this:
| Piece of the payment | Monthly |
|---|---|
| Principal and interest | $1,577.32 |
| Mortgage insurance | $121.75 |
| Property taxes | $217.92 |
| Homeowners insurance | $283.00 |
| Total | $2,200.00 |
That payment matches an FHA price of about $275,300. The base loan is $265,638.77, and the loan with UFMIP is $270,287.45.
Over five years, $2,200 a month in rent adds up to $132,000. The same $2,200 a month on the mortgage pays the loan down from $270,287.45 to $250,724.55. That's $19,562.90 of principal, and it's yours whether you sell or stay. Any rise in the home's value comes on top of that.
Now check the qualifying side. With $300 a month in other debts, FHA needs $4,690.83 a month in income for the $2,200 housing payment (46.9%). The total ratio would need only $4,393.67, so the housing ratio sets the bar. A renter earning $4,700 a month or more qualifies at this price.
The 3.5% down payment is $9,634.57. With FHA 100% financing, a down payment assistance second covers it, and that renter can buy without saving the down payment first.
Where to go from here
If the price fits the neighborhoods you want, run it through the price check on a real listing. If your income comes up short, the co-signer calculator shows how a parent or grandparent can close the gap without going on the title. To see what you'd bring to closing, open the cash to close calculator.
If the numbers say you could own for what you're paying now, the next step is a conversation. Call AAA Capital Funding at 888-601-8344 and we'll run your rent, income and savings through the real programs with you.