FHA Interest Rates: Compare Current Rates and Loan Offers

Compare FHA loan offers to get the lowest rates and save thousands

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How do FHA interest rates work?

FHA interest rates are typically lower than conventional loan rates, but will vary depending on your credit score, financial profile and lender. And when you add in the cost of FHA mortgage insurance, FHA loans may end up being more expensive than comparable conventional loans. That’s why it’s important to keep an eye on the total loan costs of any mortgage you’re considering, not just the interest rates.

What’s for certain, though, is that comparing loan offers to get the lowest rate can save you thousands of dollars in the long run.

 

BalanceScale icon How do I find FHA lenders to compare rates?

LendingTree’s list of the best FHA mortgage lenders is a great place to start. You can also try a comparison rate site, or ask for a referral from a friend, relative or a real estate agent. You can look up FHA-approved lenders online through the U.S. Department of Housing and Urban Development’s lender list search tool.

Current FHA interest rates trends

Interest rates have been rising since early 2023 and crossed the 7% threshold in August, before continuing a steady march toward 8%. However, recent rates have been dropping slightly as the end of the year approaches. Still, LendingTree’s mortgage rates forecast expects them to remain high into the new year.

Are FHA loan rates lower than conventional rates?

Yes, but that doesn’t always mean they’re cheaper. To understand why, you’ll need to pay attention to your annual percentage rate (APR). Unlike an interest rate, which only measures the cost to borrow money, an APR captures the total costs of a loan.
So while FHA loans may have attractive-looking interest rates, it’s also important to look at the APR. FHA loans often have higher APRs than comparable conventional loans because they require you to pay for FHA mortgage insurance.

Insurance icon How much is FHA mortgage insurance?

The exact amount you’ll pay in mortgage insurance premiums will vary based on your loan amount. For example, an FHA borrower with a $300,000 loan amount can expect to pay $5,250 in upfront fees, and between $1,500 and $1,650 in annual premiums thereafter.

How to get the lowest FHA mortgage rates today

  • Shop around
    Compare the loan estimates from three to five different FHA-approved lenders. In addition to interest rates, focus on each lender’s closing costs, since these can be a significant expense. A lower interest rate may come with higher costs, so make sure you have extra cash to cover these fees.
    FHA closing costs typically range from 2% to 6% of your loan amount.
  • Boost your credit scores
    Although the FHA doesn’t require a high credit score to approve you for a loan, a higher credit score can get you a lower FHA interest rate. Most FHA loan borrowers have a score between 640 and 680. If your score is significantly lower, you can improve it by paying bills on time and keeping each of your credit card balances below 30% of your available credit.

    CreditScore icon Learn more about how to improve your credit score.

  • Choose a shorter term
    If you can afford a higher monthly payment, your FHA loan rate will be lower with a shorter term, like a 15-year fixed-rate mortgage instead of the more common 30-year fixed-rate mortgage. You’ll also save thousands of dollars in interest over the life of the loan.

    LT dashboard icon Learn more about how to choose between a 15-year and 30-year mortgage.

  • Ask the seller to buy mortgage points
    Paying for mortgage points buys you a lower interest rate. One full point costs 1% of your loan amount. You can ask the seller to pay up to 6% of your home price toward closing costs (including mortgage points) to get a lower FHA interest rate. You may also be able to deduct the cost of the points when you file your taxes.
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Pros and cons of FHA loans

How to qualify for an FHA loan

You’ll need to meet the minimum requirements below to be approved for an FHA loan.

Down payment3.5% with a 580 score
10% with a 500 to 579 score
Credit score580 with a 3.5% down payment
500 to 579 with a 10% down payment
Debt-to-income (DTI) ratio43% with exceptions up to 50% or higher
OccupancyMust live in home as primary residence
EmploymentStable two-year employment history, no income limits
AssetsDown payment can be gifted by an employer, family member, close friend or charitable organization
Loan limits$498,257 for a one-unit home in most parts of the country
Higher FHA loan limits may be available in high-cost areas
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Frequently asked questions