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FHA loans are mortgages backed by the U.S. Federal Housing Administration. FHA loans are designed to help borrowers get mortgages with minimal down payments.
The best FHA loans make accessing safe, affordable housing easier, even if your credit score or income isn’t where you want it to be.
Basic requirements include a 3.5% down payment, a 580-credit score, and upfront FHA mortgage insurance premium totaling 1.75% of the loan amount.
This review will focus on each of our 13 lenders’ FHA loan options, with details on FHA-specific qualification requirements and the mortgage process.
What We Like:
Rocket Mortgage, run by Quicken Loans, is licensed to originate FHA loans in all 50 states. The lender offers perks such as ten-minute preapprovals, an asset retrieval system, and 90-day interest rate locks.
And when you’re ready to move forward, you can e-sign your closing documents from the comfort of your living room.
Quicken Loans offers more flexible DTI requirements than most lenders for its FHA loans, with maximums up to 57%. You’ll also need a credit score of at least 580 with a 3.5% down payment.
What We Like:
AmeriSave is an online mortgage lender primarily dedicated to refinance loans. They offer FHA mortgages in every state except New York.
Requirements include a credit score as low as 580 for most FHA loans or 640 for loans larger than $700,000.
Although the lender charges a $500 application fee, they also promise to match their competitors’ interest rates or pay you $500 if you close with another lender. You can get started by filling out a rate quote request online.
What We Like:
Quicken Loans – which changed its name in July 2021 to Rocket Mortgage (online version) – is a leading U.S. lender by volume. They emphasize their FHA loan offerings and accept borrowers with credit scores of 580 and a DTI as high as 50% with 3.5% down. They also consider alternative credit data, such as rent and utility payments.
But the company’s name-brand service comes at a price: particularly, its higher-than-average rates and fees. That said, Quicken’s online mortgage process is second to none, with digital rate locks, loan tracking, and e-closing.
What We Like:
LoanDepot is licensed in all 50 states and specializes in refinance, purchase, and renovation loans.
This online lender also operates over 200 physical branches. Between its mello smartloan software and top-notch customer service, you can close in as few as 20 days.
LoanDepot offers FHA loans in a variety of terms, including 10, 15, 20, and 30-year fixed-rate mortgages. You can qualify with a credit score as low as 500 with a 10% down payment.
What We Like:
Guaranteed Rate is a hybrid lender that offers digital and in-person loans in all 50 states.
This originator boasts competitive interest rates, an excellent customer service record, and a streamlined mortgage process. Plus, you can get prequalified in just 15 minutes and receive your preapproval letter within 48 hours.
For FHA borrowers, Guaranteed Rate requires a FICO score of at least 600 to 620. You can also choose either a 3.5% or 10% down payment option. To get started, simply apply online or contact a loan officer.
What We Like:
Guild Mortgage dedicates a substantial portion of its mortgage origination business toward FHA loans.
This lender requires a lower-than-average credit score of 540 with 3.5% down on your loan. And unlike some of its competitors, it processes, underwriters, and funds its loans in-house.
Guild Mortgage also partners with 500 down payment aid programs to make homebuying more affordable for lower-income families. Plus, with its in-house first-time homebuyer and affordable lending programs, you can find a loan program that works for you.
What We Like:
PennyMac is a nationally available direct lender that services the mortgages it originates. You can apply online or over the phone and get preapproved in just minutes.
The lender also pairs you with an experienced loan officer during underwriting to make the process as painless as possible.
For FHA loans, PennyMac notes that borrowers “generally need to have good credit,” though it will excuse “blemishes” if borrowers can demonstrate recent fiscal responsibility. Additionally, PennyMac allows a higher-than-average DTI of 50-55% and may accept alternative tax histories.
What We Like:
Mr. Cooper Mortgages is one of the largest non-bank lenders in the U.S. It offers online loan tracking, financial wellness apps, and a plethora of loan programs. But to get started, you’ll need to apply online and wait for a loan officer to contact you.
FHA borrowers who wish to use Mr. Cooper need a credit score of at least 580 with a 3.5% down payment.
The lender may combine nontraditional credit data with manual underwriting to increase your chances of approval and a smooth loan process.
What We Like:
Freedom Mortgage is another hybrid FHA lender that provides a full range of mortgage services. It specializes in government-backed loans, including FHA and VA mortgages, and works well with borrowers with financial issues. To get started, you can call a loan officer or apply online.
Because it focuses on borrowers who may otherwise be denied, Freedom Mortgage offers flexible requirements.
FHA borrowers can qualify with a 540 minimum credit score and alternative creditor history. The lender also works with a range of DTI ratios.
What We Like:
Chase is a well-established bank with over 4,700 branch locations and a seamless online lending experience.
The bank offers a variety of perks, such as $2,500 back if you don’t close on time, up to $5,000 in closing cost grants, and hefty discounts if you’re a Chase bank customer. Plus, you can enjoy 24/7 customer service.
While this lender doesn’t publish its credit score requirements, borrowers can likely expect a minimum credit score of 580 with a 3.5% down payment.
And fortunately for borrowers who need a little boost, your entire down payment can be gifted funds.
What We Like:
Alterra is a Hispanic-owned lender focused on serving the underserved. Alterra works with borrowers who have nontraditional credit and income sources, those with no Social Security Number, and undocumented immigrants.
But because it tends to serve “high-risk” populations, its requirements, interest rates, and fees may be higher than many competitors.
It also doesn’t post the bulk of its mortgage requirements online, though it notes that FHA borrowers will need a credit score of at least 600.
What We Like:
Caliber Home Loans relies on technology to “take eligible borrowers from application to closing in record time.”
The lender services a full range of credit scores and offers 12-month rate locks, though its interest rates trend toward the higher end of the spectrum. While Caliber doesn’t post mortgage rates, you can use the QuickQuote tool to get a quote with no impact on your credit score.
Typically, borrowers will need a score of at least 580 at 3.5% down; the lender currently doesn’t list its DTI requirements.
What We Like:
PrimeLending is renowned for its customer service and robust product menu of over 400 loan options. It provides a seamless online application and closing experience, though it doesn’t allow you to shop rates online.
PrimeLending is also known for its closing cost assistance programs for low-income borrowers who want to get into a good home. PrimeLending doesn’t post its FHA loan requirements online, but it’s fair to assume you can expect a 580-credit score at 3.5% down. The lender also offers an unusual float-down rate lock option, which lets you snag a lower interest rate in the 21 days before closing.
Typically, the best FHA lenders offer excellent service, low rates, and some flexibility. But not every lender will meet your needs, which is why it’s important to comparison shop rates, fees, terms, and other factors.
When you’re shopping lenders, fees should be one of your primary pain points (aside from interest rates).
While you may know about mortgage origination fees, many lenders separate their blanket fee into several smaller fees to give the impression you’re getting more for your money. Watch out for:
Typically, you can expect to pay up to 6% of your loan principal in closing costs, though online mortgage lenders may charge as little as 2%.
But beware: some lenders lower closing costs but charge higher interest rates, leading to you paying more in the long run.
Knowing what it takes to qualify for a loan reduces the chance you’ll take a credit hit applying for a loan you can’t get.
While lenders may set their own higher limits, FHA loans typically require a minimum credit score of 580 with 3.5% down and a debt-to-income ratio around 43%.
While FHA loans are government-backed home loans, private lenders can set their own interest rates based on your down payment and risk as a borrower.
Comparison shopping rates is the best way to ensure you get the lowest possible mortgage rates at the best terms.
Additionally, you’ll want to compare APRs, which include points and other fees as well as your rate. This is a more accurate representation of your loan’s total cost.
FHA loans typically come with terms of 15 or 30 years and may offer fixed or adjustable interest rates.
While 15-year loans may seem better, bear in mind that you’ll have to make substantially higher monthly mortgage payments.
However, if you can swing the cost, you’ll pay less in interest, which can save you tens or even hundreds of thousands in the long term.
Another factor you’ll want to check is a lender’s average closing and funding time. The fastest lenders, like Better Mortgage, boast that they can have you closed in just two weeks. But some lenders are notorious for taking two months or more on average.
FHA loans carry flexible, easy-to-meet requirements set by the government. However, mortgage lenders may impose their own stricter regulations at their discretion. Typically, you can expect requirements to include:
Additionally, FHA loans are designed for primary residences only, which means you can’t use them to pay for secondary or investment properties. They must also meet safety and security standards and be approved by an FHA appraiser.
Furthermore, while FHA loans don’t carry income restrictions, you can’t borrow above the maximum loan amount set for your area.
Depending on the market and cost of living, FHA loan limits range from around $356,000 to over $822,000 in the continental U.S. (Alaskan and Hawaiian markets may carry even higher limits, and you may qualify for a higher amount if you purchase a duplex.)
>> More: FHA Appraisal Requirements
You can absolutely get preapproved for FHA loans if you meet the requirements set down by both the FHA and the lender.
If you’re preapproved, you’ll receive a letter valid for 60-90 days. (Bear in mind that you’ll need to work with an FHA-approved lender to get FHA loans.)
>> More:How to Get Mortgage Preapproval
Yes, you can get an FHA loan if you have student loan debt, though you’ll still have to meet FHA’s DTI requirements. FHA student loan guidelines note that your lenders must include all student loans in DTI.
If your payments are currently deferred, your lender will consider your monthly obligation to be 1% of your total student loan balance, or $100 per month for every $10,000 you owe.
FHA loans are available to any buyers who meet the requirements. That said, they’re popular with first-time homebuyers due to their generous credit score and down payment requirements.
To get approved for an FHA loan, you’ll need to meet both government and lender requirements, including credit score, down payment amount, DTI ratios, and loan limits. You can then apply through your chosen lender for the FHA loan program.
Note that, unlike some programs, having a bankruptcy on your record doesn’t ruin your chances of approval, but you’ll have to wait at least two years to apply for a mortgage. If you have a foreclosure on your record, you’ll need to wait at least three.
FHA loans come with several advantages, including:
FHA loans also come with several downsides, including a few unique to the FHA mortgage program, like:
If you’re looking for a mortgage but have poor credit, an FHA loan’s minimal qualification requirements may suit your needs.
On the other hand, if you have great credit or can afford a conventional mortgage, you might save money by bypassing the mortgage insurance requirements and choosing from a larger pool of lenders.
Methodology
To select the Best FHA Mortgage Lenders, we reviewed 40+ FHA Lenders that offer online and in-person experiences. The criteria we used to accurately score and rate each FHA mortgage lender included reviewing current FHA rates, credit score requirements, down payment requirements, nationwide availability, industry reputation, customer support, closing fees, origination fees, closing times, online experience, and security. These trackable metrics paired with expert sources – J.D. Power’s Mortgage Origination Satisfaction Survey, Verified Google Reviews, Trustpilot, Better Business Bureau, Home Mortgage Disclosure Act, and Nationwide Mortgage Licensing System – allowed analysts to accurately rate FHA lenders. Read our editorial guidelines and FHA mortgage rating methodologies to learn more about the honesty and impartiality of our reviews.
Jordan Blansit is a Senior Writer, Researcher, & Product Analyst for SimpleMoneyLyfe with an inexplicable predilection for mortgages, investing, and personal finance. When she’s not click-clacketing from the comfort of her living room, you can find her in the California Redwoods or Oregon Siskiyous. Jordan’s areas of expertise are mortgages, personal loans, credit cards, and investing.
