FHA Case Study: $300,000 Home, 3.5% Down
Full line-item math. Every figure shown with its formula. No approximations.
Scenario Assumptions
Purchase price
$300,000
Down payment
3.5% / $10,500
FICO score
680
Interest rate
6.80% (FHA avg Apr 2026)
Loan term
30-year fixed
Property tax
1.1% / $275/mo
Home insurance
$1,400/yr / $117/mo
Annual appreciation
3% (projection only)
1. Closing Day Line-Item
| Purchase price | $300,000 | |
| Down payment (3.5%) | ($10,500) | Your cash at closing |
| Base loan amount | $289,500 | $300,000 - $10,500 |
| UFMIP (1.75% of base loan) | $5,066 | Rolled into loan per HUD ML 2024-04 |
| Total loan amount | $294,566 | $289,500 + $5,066 |
| Closing costs (estimate) | ~$8,400 | Origination, title, escrow, prepaids |
| Total cash at closing | ~$18,900 | $10,500 down + $8,400 costs |
If the seller agrees to a 6% concession ($18,000), and you negotiate it to cover closing costs ($8,400), your total cash at closing drops to $10,500. This is the maximum FHA leverage scenario.
2. Monthly Payment Breakdown (PITI)
| Principal + Interest | $1,920 | $294,566 @ 6.80% / 30yr |
| Annual MIP (0.55% / 12) | $140 | $294,566 x 0.0055 / 12 (month 1) |
| Property tax (1.1% / 12) | $275 | $300,000 x 0.011 / 12 |
| Home insurance | $117 | $1,400 / 12 |
| Total PITI | $2,452 | Month 1 |
3. Year-by-Year MIP Schedule (Selected Years)
MIP declines each year as the balance amortises. Monthly MIP calculated as: balance x 0.0055 / 12.
| Year | Balance | Monthly MIP | Annual MIP |
|---|---|---|---|
| Year 1 | $305,250 | $140/mo | $1,680 |
| Year 2 | $303,412 | $139/mo | $3,348 |
| Year 3 | $301,487 | $138/mo | $5,004 |
| Year 4 | $299,473 | $137/mo | $6,648 |
| Year 5 | $297,367 | $136/mo | $8,280 |
| Year 10 | $285,800 | $131/mo | $19,200 |
| Year 15 | $270,620 | $124/mo | $33,840 |
| Year 20 | $250,800 | $115/mo | $46,800 |
| Year 25 | $225,300 | $103/mo | $58,200 |
| Year 30 | $192,300 | $88/mo | $69,120 |
| 30-Year Total | ~$47,520 |
4. 30-Year Total Cost of Ownership
| Principal + Interest (30yr) | $691,200 | $1,920 x 360 |
| Total MIP (30yr) | $47,520 | Cumulative annual MIP |
| UFMIP (upfront, rolled in) | $5,066 | 1.75% of base loan |
| Property taxes (2% annual increase) | ~$130,000 | Rough 30-year total |
| Home insurance (2% annual increase) | ~$54,000 | Rough 30-year total |
| Grand total paid over 30 years | ~$927,786 | For a $300,000 home |
5. The Refi-to-Conventional Pivot at Year 5
Assume 3% annual home appreciation. At year 5:
- Home value: $300,000 x (1.03^5) = $347,800
- Loan balance: ~$276,700 (after 5 years of principal payments)
- LTV: $276,700 / $347,800 = 79.6% ✓ Eligible for no-PMI conventional refi
- Refi closing costs: ~$5,000
- Monthly MIP saved: ~$130/month
- Break-even: $5,000 / $130 = 38 months (~3 years)
- Remaining MIP if no refi (25 years): ~$35,000
By refinancing at year 5, you pay $5,000 in closing costs and eliminate $35,000 in future MIP. Net saving vs not refinancing: approximately $30,000. See full refi analysis with live calculator.
6. Sensitivity Analysis
If FICO Is 580 Instead of 680
| Rate | ~7.20% (FHA, 580 FICO) | ~6.80% (base case) |
| Monthly P+I | $2,004 | $1,920 |
| Monthly PITI | $2,536 | $2,452 |
| 30-year interest extra | ~$30,000 more | Base case |
If Down Payment Is 10% Instead of 3.5%
| Down payment | $30,000 (10%) | $10,500 (3.5%) |
| Base loan | $270,000 | $289,500 |
| UFMIP (1.75%) | $4,725 | $5,066 |
| Monthly P+I | $1,792 | $1,920 |
| MIP duration | 11 years only | 30 years (life of loan) |
| Total 30-yr MIP | ~$16,600 | ~$47,520 |
| MIP savings vs 3.5% | ~$30,920 saved | Base case |
If you can scrape together 10% down instead of 3.5%, the MIP duration drops from 30 years to 11 years, saving approximately $30,920 in MIP alone. This is often worth delaying the purchase 6-12 months to accumulate the extra down payment.
7. Side-by-Side: FHA vs Conventional on $300k
| Item | FHA 3.5% Down | Conventional 5% Down |
|---|---|---|
| Cash at closing | ~$18,900 | ~$23,400 |
| Month 1 PITI | $2,452 | $2,354 |
| Monthly mortgage insurance | $140 MIP | $131 PMI |
| Mortgage insurance ends | Never (without refi) | Year 8 (at 3% appreciation) |
| Total mortgage insurance (30yr) | $52,586 (UFMIP + MIP) | $12,052 PMI |
| 30-year total paid | ~$927,786 | ~$855,212 |
See conventional case study for full 5% down conventional breakdown.
Frequently Asked Questions
How much cash do I need at closing for FHA on a $300k home?+
What is the monthly payment on a $300k FHA loan?+
How long does FHA MIP last on a $300k loan?+
Can I roll UFMIP into the FHA loan?+
What rate should I expect on an FHA loan?+
Related Pages
Last verified April 2026. Rate based on Freddie Mac PMMS and FHA survey week of 10 April 2026. Property tax at 1.1% national median. Insurance at $1,400/yr.