Federal Housing Administration (FHA) loans are government-backed mortgages for single-family and multifamily homes. They are offered through FHA-approved private lenders. FHA loans are often more accessible than their conventional counterparts: They tend to have lower income and credit score requirements. In addition, FHA loans only require a minimum 3.5 percent down payment, which is helpful for buyers who haven’t a lot of cash on hand. As a result, FHA loans are popular among first-time homebuyers, people on tight budgets and folks who have lower credit scores.

Is an FHA loan right for you?

An FHA loan can be a viable path to homeownership for many types of buyers. If you have a low credit score, an FHA loan might make sense. While most lenders call for a minimum credit score of 620 for conventional loans, FHA loans have looser requirements. Homebuyers with a score as low as 500 can still be eligible for an FHA loan. However, lower scores also mean higher down payments. An FHA loan also is ideal for borrowers who need a loan with low down payment requirements. If you have a minimum 580 credit score, FHA loans require only 3.5 percent down.

What are the different types of FHA loans?

Basic home mortgage loan 203(b): A standard mortgage loan insured by HUD. Borrower must meet credit requirements and must purchase a one-to-four unit structure with a price below the area’s mortgage limit. Up to 96.5 percent financing available. Adjustable-rate mortgages (ARMs): Unlike fixed-rate mortgages that have the same interest rate for the life of the loan, adjustable-rate mortgages will start out with a lower interest rate for a certain amount of time, and will then adjust to a higher rate once that period expires. The rate will then change on a regular basis, typically once a year. You might consider an ARM if you plan to sell the home before the rate adjusts to the higher level, or if you expect that your income will increase to compensate for higher payments. Otherwise, the risk of a significantly higher payment down the road is not to be taken lightly. 203(k) loan, aka rehabilitation mortgage: You can use this loan to finance up to $35,000 into your mortgage to repair, upgrade, or improve a single-family home. Home equity conversion mortgage for seniors: You can use this reverse-mortgage program to withdraw a portion of your home’s equity to receive as income. FHA streamline refinance: A refinance option that requires minimal borrower credit documentation and underwriting.

Do FHA loans have lower interest rates?

Rates for FHA loans are typically similar to those for conventional loans, although you might see lower interest rates advertised. For example, you might see a lower interest rate on an FHA loan compared to the interest rate on a conventional loan, but the FHA loan’s annual percentage rate, or APR, is higher. APR includes all of the fees associated with the loan.

How do FHA loans compare to 30-year fixed mortgages?

See the table below for an example of the costs associated with an FHA loan versus a 30-year fixed loan. Keep in mind, interest rates are dependent on the market and the borrower's creditworthiness.

FHA loan rates

Written by

Jeff Ostrowski

On Monday, September 25, 2023, the national average 30-year FHA mortgage APR is 7.69%. The average 30-year FHA refinance APR is 7.75%, according to Bankrate's latest survey of the nation's largest mortgage lenders.

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Weekly national mortgage interest rate trends
Today's FHA loan rates
How to find and compare FHA interest rates
FHA loan requirements
Pros and cons of FHA loans
Frequently asked questions about FHA loans

Weekly national mortgage interest rate trends

Current mortgage rates

	30 year fixed	7.59%
	15 year fixed	6.82%
	10 year fixed	6.77%

Today's national FHA mortgage interest rate trends

For today, Monday, September 25, 2023, the national average 30-year FHA mortgage interest rate is 6.76%, up compared to last week’s of 6.65%. The national average 30-year FHA refinance interest rate is 6.80%, up compared to last week’s of 6.72%.

Whether you're buying or refinancing, Bankrate often has offers well below the national average to help you finance your home for less. Compare interest rates rates here, then click "Next" to get started in finding your personalized quotes.

We’ve determined the national averages for mortgage and refinance interest rates from our most recent survey of the nation’s largest mortgage lenders. Our own mortgage and refinance interest rates are calculated at the close of the business day, and include annual percentage rates and/or annual percentage yields. The interest rate averages tend to be volatile, and are intended to help consumers identify day-to-day movement.

Today’s FHA loan rates

The table below brings together a comprehensive national survey of mortgage lenders to help you know what are the most competitive FHA loan rates. This interest rate table is updated daily to give you the most current rates when choosing an FHA mortgage home loan.

Product	Interest Rate	APR
30-Year FHA Rate	6.76%	7.69%
30-Year Fixed Rate	7.64%	7.66%
15-Year Fixed Rate	6.86%	6.89%
5/1 ARM Rate	6.61%	6.61%
30-Year VA Rate	7.01%	7.12%

Rates as of Monday, September 25, 2023 at 6:30 AM

Product	Interest Rate	APR
30-Year FHA Rate	6.80%	7.75%
30-Year Fixed Rate	7.83%	7.85%
15-Year Fixed Rate	6.98%	7.01%
5/1 ARM Rate	6.67%	6.67%
30-Year VA Rate	6.98%	7.19%

Rates as of Monday, September 25, 2023 at 6:30 AM

How to find and compare FHA interest rates

With Bankrate’s mortgage rate tables, you can receive tailored-to-you quotes from lenders by plugging in your location and basic details about your finances. These can give you a ballpark sense of what a loan might cost you.

To get a formal FHA mortgage offer, you should first decide your preferred loan term. 15-year and 30-year terms are the most common options, but there are other options available as well, such as 10-year loans. A shorter term will likely come with a lower interest rate, therefore reducing your overall expenses throughout the life of the loan, but has the downside of a higher monthly payment.

For a lender to provide you with an accurate quote, you’ll need to indicate your preferred loan term, and you’ll also have to present documents attesting to your income, assets, debts, credit score and payment history.

You can seek offers from a variety of lender institutions and compare offers online. Check Bankrate’s list of best FHA lenders. Be sure to talk with your bank or any other financial institution that you have an existing relationship with, since they may offer special rates or deals to current customers.

Bankrate’s standard advice to loan-shoppers is: For the best mortgage deal, boost your credit score before you approach lenders. Because FHA loans are specifically designed for borrowers with credit scores below 700, that counsel isn’t as crucial in this case (though strengthening your financial profile never hurts). Still, you should shop around, and garner at least three quotes. Closing costs can differ from one lender to another, so be sure to compare that part of the loan, too.

FHA loan requirements

Loan limits: While conforming loans in much of the country top out at $726,200 for 2023, the ceiling for FHA loans is $472,030 (in high-cost areas, both types of loans go up to nearly $1.1 million)
Minimum credit score: 500 for a 10 percent down payment, 580 for a 3.5 percent down payment
Maximum front-end debt-to-income ratio (amount spent on monthly mortgage payments only): 31 percent
Maximum back-end debt-to-income ratio (all monthly debt payments): 43 percent
Mortgage insurance premium: Upfront mortgage insurance premium equal to 1.75 percent of your loan amount for most FHA mortgages, in addition to monthly payments
Financial history: Steady income and proof of employment

FHA loan limits

Each year, the FHA updates its lending limits, or the maximum amount that the agency will insure for a given area and type of property. These limits are influenced by mortgage market-makers Fannie Mae and Freddie Mac’s conventional loan limits. For 2023, the national ceiling is $1,089,300 in high-cost areas and $472,030 elsewhere.

FHA mortgage insurance

FHA loans require mortgage insurance premiums (MIP) to be paid by homebuyers who put down less than 20 percent. Mortgage insurance costs add a meaningful amount to your monthly payment, so keep these costs in mind when you’re budgeting for a home.

There are two types of premiums: the upfront mortgage insurance premium (1.75 percent of the base loan amount) and an annual mortgage insurance premium (.45 percent to 1.05 percent, depending on the loan term, loan amount and the loan-to-value ratio of the home). The annual premium is owed for the loan’s lifetime, if your down payment is less than 10 percent; if you put down at least 10 percent, however, the premiums can be removed after 11 years.

Pros and cons of FHA loans

Pros

Low down-payment requirements
Friendly to first-time homebuyers (includes those who have not owned a home for at least three years)
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
Can lock in a low rate without a large down payment

Cons

Borrower required to pay two types of mortgage insurance: upfront mortgage insurance premium (MIP) and an annual premium
Require that the house meet certain standards, which decreases buying options

Frequently asked questions about FHA loans

Federal Housing Administration (FHA) loans are government-backed mortgages for single-family and multifamily homes. They are offered through FHA-approved private lenders.

FHA loans are often more accessible than their conventional counterparts: They tend to have lower income and credit score requirements. In addition, FHA loans only require a minimum 3.5 percent down payment, which is helpful for buyers who haven’t a lot of cash on hand. As a result, FHA loans are popular among first-time homebuyers, people on tight budgets and folks who have lower credit scores.
An FHA loan can be a viable path to homeownership for many types of buyers. If you have a low credit score, an FHA loan might make sense. While most lenders call for a minimum credit score of 620 for conventional loans, FHA loans have looser requirements. Homebuyers with a score as low as 500 can still be eligible for an FHA loan. However, lower scores also mean higher down payments.

An FHA loan also is ideal for borrowers who need a loan with low down payment requirements. If you have a minimum 580 credit score, FHA loans require only 3.5 percent down.
- Basic home mortgage loan 203(b): A standard mortgage loan insured by HUD. Borrower must meet credit requirements and must purchase a one-to-four unit structure with a price below the area’s mortgage limit. Up to 96.5 percent financing available.
- Adjustable-rate mortgages (ARMs): Unlike fixed-rate mortgages that have the same interest rate for the life of the loan, adjustable-rate mortgages will start out with a lower interest rate for a certain amount of time, and will then adjust to a higher rate once that period expires. The rate will then change on a regular basis, typically once a year. You might consider an ARM if you plan to sell the home before the rate adjusts to the higher level, or if you expect that your income will increase to compensate for higher payments. Otherwise, the risk of a significantly higher payment down the road is not to be taken lightly.
- 203(k) loan, aka rehabilitation mortgage: You can use this loan to finance up to $35,000 into your mortgage to repair, upgrade, or improve a single-family home.
- Home equity conversion mortgage for seniors: You can use this reverse-mortgage program to withdraw a portion of your home’s equity to receive as income.
- FHA streamline refinance: A refinance option that requires minimal borrower credit documentation and underwriting.
Rates for FHA loans are typically similar to those for conventional loans, although you might see lower interest rates advertised. For example, you might see a lower interest rate on an FHA loan compared to the interest rate on a conventional loan, but the FHA loan’s annual percentage rate, or APR, is higher. APR includes all of the fees associated with the loan.

	FHA Loan	30-Year Fixed Loan
House price	$391,200	$391,200
Loan amount	$377,508	$379,464
Interest rate	6.04%	5.54%
Principal + interest	$2,597	$2,488
Mortgage insurance	$267	$315
Total monthly payment	$2,864	$2,803

Written by: Jeff Ostrowski, mortgage reporter for Bankrate

Jeff Ostrowski writes about the U.S. housing market for Bankrate. He has appeared on CNBC and numerous radio and television outlets to discuss his reporting about real estate trends.