Compare top FHA lenders
FHA loans are popular because of their milder guidelines. Home buyers can qualify with a credit score of just 580 and a decrease of 3.5%.
And it's easy to find FHA funding. The majority of lenders are approved by the FHA. However, this does not mean that you should turn to just any FHA lender.
As with other loan types, FHA loan rates and requirements can vary greatly from company to company. So you should compare a few different FHA approved lenders to find the best deal.
Check Your FHA Loan Rates (Jan 4th 2021)
Minimum. Credit score requirement
Best Features *
Lowest average prices and fees
Low average rates
Low average prices, first class service
New American funding
Average prices, first class service
Finances of america
Top-rated service, low credit allowed
Low credit allowed
Low credit allowed
Lower average loan costs
* An average interest and fee analysis based on self-reported data providers must be submitted under the Home Mortgage Disclosure Act. Actual prices and fees vary by customer
Check Your FHA Loan Rates (Jan 4th 2021)
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The 9 Best FHA Lenders for 2021
FHA loans are known to have simpler requirements than other mortgages. However, this is not the case with every lender.
For example, some FHA approved lenders allow credit scores as low as 500 (with a 10% down payment) while others set their minimum credit score at 620 or even higher.
Likewise, some lenders offer lower mortgage rates than others.
That means looking for an FHA loan is important – doubly when you have bad credit or some other problem that makes qualifying difficult.
So check with the lenders on this list. But also consider local banks and credit unions, which may take a more hands-on approach to qualifying issues.
Check Your FHA Loan Eligibility (Jan 4th 2021)
1. Homepoint Financial
How is Homepoint listed as our # 1 FHA Lender when it was only founded in 2015? Mainly because it had the lowest average FHA mortgage rate of any lender on our list in 2019 – and the third lowest cost of borrowing.
But it is also a good all-rounder that scores well with customer complaints and online reviews. Here are some other things you need to know:
Licensed to provide FHA loans in all 50 states. Good online application and follow-up after initial phone contact. Has a mobile app for homeowners. Has an A-Better Business Bureau (BBB) rating. Very few physical branches
Some customers have reported minor flaws in the application process and difficulty solving problems.
However, if you want to pay as little as possible for your FHA loan, then you want Homepoint on your shortlist.
2. Liberty Mortgage
The mortgage rates on FHA loans are almost as low as Homepoint. So they're the second lowest on our list. However, the average closing costs for these loans were in the mid-range in 2019.
Freedom was also the largest FHA lender on our list in 2019, raising 129,000 FHA loans.
Inside Mortgage Finance called it the largest FHA lender in America for the first three quarters of 2020.
This has advantages and disadvantages. Freedom Mortgage has unmatched experience in creating FHA mortgages. However, it also has more customer complaints filed with the Consumer Financial Protection Bureau (even considering the volume) than any of our other top lenders, with the exception of the US bank.
Still, there are many positive aspects, especially:
Very low average mortgage ratesChoose how you want to get involved: online, by phone or through a limited network of branches. Operates in all 50 states. Takes the “non-traditional loan histories” into account. Loan file I like to work with programs to support down payments. Has a B + BBB rating
All in all, Freedom Mortgage is another very strong contender on your shortlist.
Check out Freedom's Mortgage Rates Today Jan 4th 2021
3. CMG Financial
CMG Financial had the third lowest average FHA rates in our survey. In terms of online reviews and customer complaints at CFPB, it did better than our two top 2.
However, the average FHA loan fees were higher than most on our list. That means more expensive closing costs.
Other considerations include:
Has an A + BBB rating. Licensed in most but not all states. The mobile app allows you to monitor and advance your FHA loan application. Named as one of the 2020 HousingWire tech trendsetters
Overall, CMG Financial offers an attractive combination of low rates and excellent customer service.
4. New American Funding
According to New American Funding, mortgage applications are considered on a case-by-case basis.
In other words, not only are boxes ticked, but they are happy to elaborate on the reasons why your application may be marginal.
This approach could be helpful to many who want an FHA loan – especially those whose credit reports have a history of red marks.
You also need to know:
New American Funding operates in 48 states, but not in New York or Hawaii. Has an A + BBB rating. Excellent technology with the option of a fully digital experience. More than 200 stores in 34 states for those who prefer face-to-face meetings. Few complaints to the Consumer Financial Protection Bureau -best for online reviews
The main disadvantage is above-average borrowing costs. But for many borrowers, this could be a worthwhile price.
Check the New American Funding mortgage rates today, January 4, 2021
5. Finances of America
Finance of America offers competitive FHA loan rates that averages below our top 9 FHA lenders. However, the cost of borrowing was only slightly higher than that of New American Funding.
However, with Finance of America, you can probably expect a more personal experience. This is because you work one on one with a consultant throughout the process, often by phone and email.
Here are the basics:
Finance of America operates in all 50 states. Has an A + BBB rating. Has more than 400 local consultant branches. Very few customer complaints to the CFPB
Finance of America appears to be value for money and a good choice for those who want personalized service.
6. Fairway Independent Mortgage
Fairway Independent Mortgage Co. is the lowest on our survey for average FHA loan costs. But its prices are more competitive than extremely low.
Fairway also submitted the fewest customer complaints to the CFPB and the second highest score for online customer reviews. With that, it has clearly earned its spot as one of the top FHA lenders this year.
Here are some other considerations:
Over 500 branches well spread across 48 states (operating in all 50 states). Fancy technology that allows you to complete your application in 10 minutes and do the whole process online if you wish. Has an A + BBB rating
We like Fairway's excellent customer service and think this is a challenge for most shortlists.
7. Cross Country Mortgage
If speed is important to you, CrossCountry might be your best bet. This company estimates that it can complete most loans within 21 days.
However, a more complicated underwriting process can often slow down loan approval. So if you have any issues with your credit history or any other issue that needs explaining, you should expect your loan approval to take longer than advertised.
CrossCountry also fosters strong personal relationships between borrowers and loan officers. So you have someone to help you borrow.
Works in all 50 states with physical offices in 37 Has an A + BBB rating. Good results from online customer reviews. And a small number of complaints to the federal regulator, you'll need to speak to a loan officer before you can get a quote
All in all, this is another excellent lender worth checking out for your FHA loan.
Check out the CrossCountry Mortgage Rates today, Jan 4th, 2021
PrimeLending won second place in our rating of the 8 best first-time mortgage lenders. We liked that it works well with state and local deposit support programs.
PrimeLending also has its own form of support: the NeighborhoodEdge® Closing Cost Assistance program, which offers shoppers in low-income or low-income neighborhoods up to $ 2,000.
If you qualify for this benefit, you may not mind PrimeLending's slightly above average mortgage rates. Especially since the borrowing costs for our nine lenders are below average.
Other important information are:
PrimeLending operates in all 50 states. Has an A + BBB rating. Good for those who enjoy working online but also offers a lot of human support. E-Closing (online closing) option
PrimeLending has a lot going for it. And especially if you are waiting in line for that $ 2,000 help with closing costs, this might be your first choice.
9. US bank
The US bank is by far the largest (and longest established) organization on our list. You probably love or hate big banks. Anyway, give this one a shot.
The US bank has the second lowest cost of borrowing on our list. Equally important, it was a top 5 lender in J.D.'s Primary Mortgage Satisfaction Study in the United States. Power 2020 was what a real achievement is.
Other than that, the US bank has:
Operates in all 50 states. Has a network of more than 3,000 branches for those who prefer face-to-face encounters. Offers good self-service online technologies. Has an A + BBB rating
If you are already a US bank customer, you have the added benefit of having all of your finances under one roof.
Check your FHA loan rates today (Jan 4th 2021).
FHA home loan requirements
Thanks to their support from the Federal Housing Administration, FHA loans are usually easier to approve than other types of loans – especially if your creditworthiness isn't as strong as you'd like.
To qualify for any of these loans, most FHA approved lenders will require:
A minimum credit score of 580. Some may approve with a FICO score of 500-579, but only if you receive a 10% deposit. These are simpler loan requirements than most other mortgagesA low deposit of at least 3.5% if your credit score is 580 or higherMaximum debt-to-income ratio (DTI) of 50%. This means that your new mortgage payments combined with ongoing debts such as credit cards, car loans, and student loans cannot exceed half of your monthly pre-tax income. Check out Simple mortgage definitions: Debt-to-Income (DTI) for more informationsSolid employment history Have a reliable income that is expected to last for at least 3 years after the loan was taken outA relatively clean credit rating that has been foreclosure free for three years
In addition, you will need to buy a house that will be your primary residence. This is often a single-family home, although the federal housing administration also insures 2-, 3-, and 4-unit properties as long as the owner lives in one of the units all day.
Finally, the property you are buying or refinancing must be within the current FHA loan limits.
In most countries, the FHA maximum loan amount is $ 356,362 for a single family home. However, the multi-family loan limit can go up to $ 685,400 for a 4-unit property.
If you are looking to buy in an area where average home prices are high, the FHA credit limits may also be higher
Check Your FHA Loan Eligibility (Jan 4th 2021)
FHA mortgage rates
If you just look at the interest rates, FHA loans are very competitive. They often have similar or even lower interest rates than traditional loans that are not supported by the federal government.
Interest rates aren't the only consideration, however. Because with FHA loans, you also have to pay for mortgage insurance. This takes the form of:
An upfront mortgage insurance premium of 1.75% of the loan amount that most borrowers list in their loan balances. An annual mortgage insurance premium of 0.85% of the loan amount, paid in 12 monthly installments
The 0.85% annual mortgage insurance rate is effectively an increase in your mortgage rate. It increases your annual interest rate (APR) which takes into account both loan fees and interest.
For example, if the current FHA rates are 2.75%, your “effective rate” with mortgage insurance included may be closer to 3.6%.
Can I Get Rid of FHA Mortgage Insurance?
With an FHA loan, you usually have to pay the mortgage insurance premium (MIP) until you either sell or refinance the home.
The only exception is FHA borrowers who pay a deposit of 10% or more. In this case, the MEP payments last for 11 years.
Understandably, many borrowers with FHA loans hate mortgage insurance. But they live with it because they know that they usually make more from rising property prices than from premiums.
In this way, the mortgage insurance actually offers a high return on investment.
Pros and Cons of FHA Funding
Benefits of FHA Loans
The biggest advantages of the FHA loan program are its milder credit guidelines and low down payment.
You can be approved for a home loan even if you have one:
Low FICO credit score (580+) Low down payment (3.5%) High existing debt and monthly financial obligations (DTI of up to 50%)
If these are big factors for you, an FHA loan may be the only way to make your home ownership dreams come true. This is why they are so popular with first-time buyers.
Disadvantages of FHA Loans
FHA loans really only have one major drawback. And that's the cost of the mortgage insurance I mentioned earlier.
You need to make sure that you can comfortably afford all of your home ownership costs before signing any of these loans. But you can see them as a stepping stone.
Many home buyers expect to refinance an FHA loan to a conventional mortgage with no PMI and lower payments later.
This is usually easy when your equity reaches 20% of the value of your home.
How To Choose Your Best FHA Lender
Comparative shopping for a mortgage is nothing magical. This is the same exercise you do when looking to buy a new car, TV, or washing machine. (But you can save a lot more when you shop for a home loan.)
First, research reputable lenders who are known for their bargains. You have a head start with 9 great FHA lenders featured on this list.
Next, get a customized credit estimate from at least 3-5 of your preferred lenders. Choose the price with the lowest “price”. This means, in this case, the most competitive FHA loan rate and the cheapest closing cost for your situation.
Many borrowers can save thousands of dollars by shopping for their mortgages. So it's worth investing some time to find the best deal.
At the very least, get credit estimates from three lenders. But you increase your chances of making further savings with each other.
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