Compare current FHA loan rates

Current FHA loan rates

FHA mortgage and refinance interest rates vary based on a variety of factors. These include:

• Your financial profile: Your credit score and the amount of your down payment both influence the rate a lender will offer you. Generally, the larger your down payment and the higher your credit score, the lower your rate will be.
• Loan characteristics: Elements of your particular loan also influence your rate. For example, an FHA cash-out refinance will typically have a higher rate than an FHA purchase loan. Your loan amount and loan term also make a difference, with larger amounts and longer terms garnering higher rates.
• Market conditions and lender policies: If rates are generally higher or lower when you take out your FHA loan, that — as well as a lender's specific policies — will also influence your rate.

FHA loans vs. conventional loans

FHA loans typically have lower credit-score requirements than conventional loans, and sometimes have lower interest rates too — for these reasons, they are often recommended for first-time homebuyers. But they also have higher upfront costs. Below are some of the costs associated with an FHA loan versus a 30-year fixed loan. Keep in mind that interest rates depend on the market and the borrower's creditworthiness.

FHA loan requirements

To get an FHA loan, you must meet the following requirements:

• FHA loan limits: $541,287 for a single-family home, up to $1,249,125 in high-cost areas
• Minimum credit score: 580 with a 3.5% down payment, or 500 with a 10% down payment
• Maximum debt-to-income (DTI) ratio: Up to 50%
• Mortgage insurance premiums (MIP): 1.75% of your loan principal upfront; monthly premiums thereafter based on amount borrowed, down payment and loan term and type

• Financial and work history: Proof of consistent employment and income

FHA mortgage insurance

FHA loans require borrowers to pay mortgage insurance premiums (MIP), regardless of the size of your down payment. These costs add a meaningful amount to your monthly payment, so keep them in mind when you’re budgeting for a home.

There are two types of premiums: the upfront mortgage insurance premium (1.75% of the base loan amount), as well as an annual mortgage insurance premium (0.15% to 0.75%, depending on the loan term, amount and loan-to-value ratio). If your down payment is less than 10%, the annual premium is owed for the loan’s lifetime; if you put down 10% or more, though, the premiums can be removed after 11 years.

Should you get an FHA loan?

FHA loans are aimed at certain types of borrowers. You might want to consider an FHA loan if:

• Your credit score is below 700 (but above 500)
• You have limited down payment savings (but enough to put down 3.5 percent, plus closing costs)
• You can pay a little bit more for mortgage insurance in exchange for looser underwriting criteria
• You’re a first-time homebuyer (includes those who have not owned a home for at least three years)

Pros of FHA loans

• Lower down payment requirements
• Lower credit requirements
• Friendly to first-time buyers
• Can lock in a low rate without a large down payment
• Financing for mobile homes and factory-built homes; may accommodate people who own the land where the home will be located and those who live in a mobile home park

Cons of FHA loans

• Borrower required to pay an upfront mortgage insurance premium (MIP) of 1.75% of the base loan amount
• Borrower must also pay an annual mortgage insurance premium, paid in monthly installments
• The home purchased must meet certain standards, including passing an FHA appraisal, which may decrease available buying options

How to get the best FHA loan rate

While FHA loan rates can be lower than the rates on other types of mortgages, there are still ways to ensure you get the lowest possible rate for your situation. These include:

1. Work on your credit score: For the most competitive FHA rate, you’ll need good to excellent credit, though you can still qualify with a score as low as 500.
2. Improve your debt-to-income (DTI) ratio: Generally, the lower your DTI ratio, the better your rate.
3. Compare multiple offers: Shopping around can save you thousands of dollars over the life of the loan. Consider the interest rate as well as the APR, which accounts for the lender’s fees. Be sure to read customer reviews on lenders as well for additional insight.

Additional FHA loan resources

• How to find the best FHA lenders
• FHA refinance rates
• Mortgage calculator