Best FHA Lenders for Mortgages

Ever since the Federal Housing Administration was created in 1934, home loans backed by the FHA have been one of the best ways for first-time homebuyers to afford a home with a low down payment and low credit score. Today, the FHA insures about 15% of all new mortgages.
FHA loans are insured by the federal government and are issued by lenders such as banks, credit unions, and nonbanks. Lenders can give borrowers who might not otherwise qualify for a home loan such good loan terms because the insurance protects mortgage lenders if the borrower defaults on the loan.
FHA mortgage loans have a few requirements, which we’ll get into later. The biggest ones to know about are that FHA loans require only a 3.5% down payment with a credit score of at least 580. A score lower than 580 requires 10% down. Lenders can choose to require a higher minimum credit score so be sure your credit report is accurate before you begin.
Finding the best FHA lender is important because lenders compete for business, so shopping for the best deal with the lowest fees and interest rate can save you thousands of dollars. Here are 10 of the best FHA lenders for mortgages that we’ve found.

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Overview of the best FHA lenders for mortgages

LenderBest for
Bank of AmericaIn-person assistance
Quicken LoansOnline and phone help
Rocket MortgageMobile app
AmeriSaveLower credit scores
Carrington Mortgage ServicesNontraditional credit history
PennyMacOnline process
Mr. CooperLow credit scores
Caliber Home LoansVeterans seeking FHA loans
Alterra Home LoansImmigrant families
PrimeLendingClosing cost assistance

Best FHA lenders for mortgages

Bank of America

Bank of America is one of two FHA lenders that requires a slightly higher credit score than other FHA lenders. It requires at least a 600 credit score, which is still lower than the 620 score needed to qualify for a conventional loan at BoA.
Conventional loans aren’t insured or guaranteed by the federal government, so banks may require higher credit scores because they take on that risk directly.
Bank of America has a few home loan programs for first-time buyers, including FHA loans. It doesn’t list interest rates for FHA loans on its website.
If getting in-person help with a mortgage is important to you, and it may be if this is your first home purchase, then Bank of America can help as one of the largest banks in the world with many offices and many types of home loans. It has about 2,900 lending centers in the United States, so chances are it has a branch near you.

Quicken Loans

Interest rates on FHA loans are typically lower than on other types of loans. Quicken Loans, however, charged more for an FHA loan on the day we checked.
The 30-year fixed APR that Quicken Loans offers on FHA loans is 0.25% higher than a conventional loan for the same term. Some lenders do the opposite, charging less for FHA loans than conventional loans. The higher FHA rate at Quicken Loans isn’t so high that it should be a deal-breaker.
Quicken offers fixed or adjustable rates for 30, 25, and 15 years. It requires paying the upfront mortgage insurance premium, which it says usually equals 1.75% of the loan amount.
Quicken Loans funds a lot of FHA loans through its fully online application process and has more than 3,000 mortgage advisors who can help borrowers with the loan process. It has the highest FHA loan volume around, so it should be able to help you with any FHA mortgage questions you have.

Rocket Mortgage

Unlike its parent company Quicken Loans, which had a higher annual percentage rate on a 30-year FHA loan than on a conventional loan, Rocket Mortgage somehow turns it around and has a lower rate for the same term on an FHA loan than a conventional one. The FHA loan at Rocket Mortgage was 0.272% lower than the conventional loan is offered on the day we checked.
Still, Quicken has offered a lower interest rate than its subsidiary on FHA loans.
Interest rates can change daily, and this may be an anomaly, but it shows the importance of shopping at multiple lenders for the best rate.
One of the best things about Rocket Mortgage is its mobile app. It makes the loan application process seamless by quickly moving you to the next step. How the loan progress can be monitored on the app, including the closing and signing paperwork electronically.


For borrowers with low credit scores, AmeriSave may be a good choice. It offers FHA loans to borrowers with at least a 580 score. Loans for more than $700,000 require at least a 640 score.
FHA loans have loan limits set by the U.S. Department of Housing and Urban Development, which oversees the FHA. You can borrow up to 115% of your area’s median home price, according to HUD. In 2021, FHA loans for a single-family home can be from $356,362 to $822,375, depending on where you live.
FHA lenders such as AmeriSave can require higher credit scores for homes at a higher purchase price.
AmeriSave isn’t too transparent about its FHA loan rates. It doesn’t list rates on its website. To get a mortgage rate estimate, you’ll have to start its prequalification and application process, which includes allowing a soft credit inquiry.

Carrington Mortgage Services

Good credit history is usually important in being approved for a home loan, including an FHA loan, but Carrington Mortgage Services offers FHA loans at the lowest minimum credit score we can find: 500.
A FICO credit score of 300 to 579 is considered very poor. Another way that Carrington helps such borrowers get a home loan is by helping those with a poor or thin credit history to have nontraditional credit data to be considered. These include rent payment history, bank statements, and related paperwork for borrowers who need it, such as the self-employed.
When shopping for interest rates, however, you’ll have to start Carrington’s online application process. It doesn’t post sample rates on its website.


Shopping for an FHA loan can pay off with PennyMac, which guarantees that its pricing will be better than any other lender. If not, it will give you a $250 gift card.
PennyMac has an online application process that is easy to use. Its online capabilities include e-signatures and online loan process tracking.
Custom rate quotes are easy to get. They’re based on home value, down payment or home equity, ZIP code, and credit score range.
The results that potential borrowers get will usually include rate quotes for different loan types and terms, allowing customers to compare the interest rate, APR, and discount points. This can make it easy to compare loans and to see if you might qualify for something other than an FHA loan.

Mr. Cooper

Mr. Cooper doesn’t list mortgage rates online or have applications online. Doing either requires calling or emailing it for personalized rates.
Whether you like that or not, it could be worthwhile to check when you’re shopping for an FHA home loan.
For borrowers with low credit scores, Mr. Cooper is known for helping people with low credit scores get approved for loans. It requires at least a 580 credit score on FHA loans, and the standard 3.5% down payment. FHA borrowers without a credit history can use nontraditional credit data such as rental payments to increase the chance of qualifying.
Mr. Cooper is a nonbank mortgage originator that doesn’t have public branches, but is licensed to lend in all 50 states and does the entire mortgage process remotely. You can submit a contact form online, but not a loan application.
A loan professional will contact you to discuss your options. Once an application is submitted, then you can track it in real-time through the company’s digital loan tracker.

Caliber Home Loans

Not many lenders specialize in working with military veterans. Caliber Home Loans offers many educational resources for military members and other types of buyers. It offers FHA and VA loans, which generally allow lower credit scores, down payments, and income.
Caliber has a separate website focused on the Department of Veterans Affairs loans and can connect them with FHA loans.
It has an in-house educational curriculum that its loan consultants and branch managers use to help military borrowers find home loans they qualify for.
Caliber doesn’t list mortgage interest rates on its website. It also doesn’t offer general or customized rate quotes online. You must contact the lender to see what loans you qualify for, which makes comparison shopping difficult.

Alterra Home Loans

Alterra Home Loans offers FHA home loans to borrowers with FICO credit scores as low as 550. FHA loans represent the bulk of Alterra’s business.
Where Altera seems to be most unique is in the many ways it works with undocumented immigrant borrowers and other immigrant families to become homeowners.
Like some other lenders, it uses nontraditional income to help borrowers qualify for home loans. These include the self-employed, but also people who live in households where multiple family members help pay monthly bills.
For applicants who don’t have a Social Security number, Alterra offers an Individual Taxpayer Identification Number, or ITIN, loan product that undocumented immigrant borrowers can use. These loans are different from FHA loans and require a 15% down payment, a year of tax returns using an ITIN number, and other requirements.
Some of Alterra’s loans may have steeper interest rates than other lenders, in part because some of its customers are considered a higher risk in exchange for looser qualification requirements. The company’s website doesn’t list interest rates, so shoppers will have to contact a loan officer for specific rates.


Coming up with a good down payment can be one of the biggest roadblocks to buying a home. PrimeLending helps FHA borrowers and others through its NeighborhoodEdge closing cost assistance program.
Low- to moderate-income customers who qualify can get up to $2,000 in closing cost credits. The home must be in a low-to-moderate census tract area.
PrimeLending offers many types of FHA loans, from fixed-rate mortgages at 15, 20, 25, or 30 years, and adjustable-rate FHA loans. Just don’t expect to see rates listed on its website. Applicants must contact the company for rate quotes.
Among its FHA adjustable-rate mortgages, PrimeLending offers a 5-year hybrid ARM. The rate is fixed for the first five years, then changes annually with an annual cap of 2 percentage points and a lifetime cap of 6 percentage points.

Summary of the best FHA lenders for mortgages

LenderMinimum credit scoreMinimum down paymentFHA 30-year fixed APR
Bank of America6003.5%Not listed
Quicken Loans5803.5%3.328%
Rocket Mortgage5803.5%3.471%
AmeriSave5803.5%Not listed
Carrington5003.5%Not listed
Mr. Cooper5803.5%Not listed
Caliber Home Loans5803.5%Not listed
Alterra Home Loans5503.5%Not listed
PrimeLending5803.5%Not listed
Note: interest rates are accurate as of Dec. 7, 2020, for an FHA loan. Some sample rates from lenders may include paying points to get lower interest rates and assume a certain loan amount. See each lender’s website for details.


How long do I have to pay FHA mortgage insurance?

As long as you have an FHA loan. This is one of the big downsides to FHA loans and costs 1.75% of the FHA loan amount.
Private mortgage insurance is required as long as you have the loan. An FHA loan comes in two forms.
The first is a one-time upfront mortgage insurance premium or UFMIP, that’s paid at closing. The second is a monthly mortgage insurance payment.
Mortgage insurance insures your home loan in case you can’t make payments. With conventional loans, it usually is required until you have 20% equity in your home.
PennyMac gives the example of FHA mortgage insurance for a home bought for $200,000 in a 30-year fixed-rate mortgage. The upfront insurance fee is $3,500, or 1.75% of the loan amount. Borrowers also have to pay an annual premium as part of their monthly mortgage payment.
The UFMIP can usually be rolled into the loan costs as a way to reduce out-of-pocket expenses.
Refinancing into a conventional mortgage someday can allow the monthly mortgage insurance requirement to be eliminated.

Can I refinance my FHA mortgage?

Yes. It’s called the FHA Streamline refinance loan, meant for existing FHA loans.
Homeowners can bypass most traditional underwriting requirements, such as getting another appraisal or proving new income requirements.
Rates vary, but on the day we checked, PennyMac offered an FHA Streamline rate at 3.574% APR on a 30-year fixed rate. That’s higher than what it offered new buyers on an FHA purchase loan.
FHA guidelines require that a streamlined refi must benefit the borrower by either lowering the interest rate or converting the loan from an adjustable-rate mortgage to a fixed rate. It allows higher loan-to-value ratios than many refinance programs, so even if you have little or no equity in your home, you still may be eligible.

Why should I shop for an FHA loan?

Since an FHA loan is backed by the federal government, it can be an easy assumption to make that all FHA loans are the same and have the same rules.
They’re not. The FHA has minimum guidelines, but individual lenders can impose additional rules.
The required private mortgage insurance, or PMI, for example, is 1.75% of the loan amount. Some lenders may impose additional rules and set them higher. Shopping for the best FHA loan could help you avoid such lenders.

Are FHA loans only for first-time buyers?

No. Lower credit score minimums and down payment requirements make FHA loans attractive to first-time buyers, but current homeowners can use them too.
However, current homeowners may be in better financial shape than they were when they first bought their home, and they could qualify for better loan terms and rates with a conventional loan.

Why you should use the best FHA lenders for mortgages

FHA loans have many features that make them worthwhile. Here are a few:
  • You have a credit score as low as 500.
  • Down payment as low as 3.5%.
  • 580 credit score may be required to have a down payment as low as 3.5%.
  • A mortgage insured by the Federal Housing Administration.
  • Liberal FHA rules on gifts of down payment money.

Why you shouldn’t use the best FHA lenders for mortgages

An FHA loan isn’t for everyone. Here are some reasons why it may not work for you:
  • Closing costs may be required that aren’t in conventional loans.
  • FHA loan limits may not be enough to purchase the home you want.
  • No jumbo loans.
  • A 10% down payment may be needed if a credit score is between 500 and 579.
  • Total monthly debt payments can’t be more than half your pretax income, making it hard for people with high debt to qualify. This is the debt-to-income ratio.
  • The property must meet FHA's health and safety requirements.
  • An appraisal that’s separate and different from a home inspection is required.
  • Mortgage insurance is built into every FHA loan if the down payment is less than 10%.

Bottom line

If you don’t have good credit and don’t have much in savings for a down payment on a home, then an FHA loan may be worth looking at.
Shopping for any type of home loan is important so you can save money, but it can be especially vital with an FHA loan because the qualification requirements by FHA-approved lenders may be different than the standard requirements set by the FHA.
Some lenders may charge fees that others don’t or have higher interest rates because they have looser qualification standards that cause them to take on more risk.
Instead of having to make the one-time normal down payment of 20%, first-time homebuyers can use FHA loans to help make homeownership more affordable. That’s the ultimate goal of the National Housing Act of 1934, which created the Federal Housing Administration as a way to help more people buy homes.

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