Top 6 Best FHA Loan Lenders - Check Out

Best FHA Loan Lenders: Loans backed by the Federal Housing Administration (FHA) are popular among first-time homebuyers because they have more generous credit scores and down payment requirements than other mortgage loans.

Contents

6 Best FHA Loan Lenders in 2024 Tips for Comparing FHA Loans What is an FHA Loan?How Do FHA Loans Work?Types of FHA Loans FHA Loan Rates FHA Loan Requirements FHA Loan Limits Pros and Cons of FHA Loans How to Apply for an FHA Loan Alternatives to FHA Loans

Keep in mind that FHA loans aren’t just for first-time homebuyers; Regular buyers and homeowners looking to refinance can also take advantage of this loan option. The lenders we compiled for this list had a minimum rating of 4 stars, according to our analysis.

6 Best FHA Loan Lenders in 2024

Guaranteed Rate Loan Lenders

Best for Low Lender Fees

Rating: 5.0
Pre-approval Time: 1 to 2 days
Mortgage Rates: Below the national average
Days to Close: 21 to 30 days
Compare Rates: Compare rates from participating lenders in your area through Bankrate.com

Editor’s Opinion: Guaranteed Rate is favored for its online home loan process with lower fees compared to traditional home loan stores. It charges a $150 application fee for purchase and refinance loans, including FHA loans, and expects a 0.5% to 1% origination fee.

Pros: Operates in all 50 states. Displays current rates online. No Lender Fees for VA Loan Borrowers.

Cons: Some lenders offer faster pre-approval times.

Lender Details:

How to Apply: Apply online or in person at one of Guaranteed Rate’s branches. Customer service is available by phone Monday through Friday, 8:30 a.m. to 5:30 p.m. Central Time. Pre-approval letters take one to two days.
Speed: Closing can be as quick as 10 days with Guaranteed Rate’s same-day mortgage.
Eligibility: Minimum credit score of 620; 0% minimum down payment for VA loans, 3% for some conventional loans, and 3.5% for FHA loans.
Types of Loans: Fixed and adjustable rate mortgages, including conventional and jumbo mortgages, FHA and VA loans, and interest-only mortgages. Home equity lines of credit (HELOC) are also available.

Loan Type:

Home Equity Line of Credit (HELOC): ✓
Conventional: ✓
FHA: ✓
USDA: ✗
Jumbo: ✓
ARM: ✓
Specialty: ✓ (Mortgages with payment of interest only)

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Banco PNC Loan Lenders

Best for Easy Access

Rating: 5.0
Pre-approval Time: 20 to 30 minutes
Mortgage Rates: Below the national average
Days to Close: 45-day average

Compare Rates: Compare rates from participating lenders in your area through Bankrate.com

Editor’s Opinion: PNC Bank Mortgage is selected for its service in all 50 states and Washington, DC, and for offering FHA loans with no minimum loan amount, which helps borrowers secure more affordable homes.

Pros: Low Minimum Credit Score Requirements. Fast pre-approval time. Online and in-person services available. Various discount programs available. Extensive digital support for existing customers.

Cons: Does not offer renovation loans.

Lender Details:

How to Apply: Apply online or in person at a bank branch in the listed states and Washington DC. Customer support by phone is available Monday through Thursday from 8:00 a.m. to 9:00 p.m. ET, Friday from 8:00 a.m. to 5:00 p.m. ET, and Saturday from 9:00 a.m. to 2:00 p.m. ET. Pre-approval can take as little as 30 minutes or up to a day.
Speed: Average closing time is 45 days, with some cases as quick as 30 days.
Eligibility: Minimum credit score of 620; 700 for jumbo borrowers. Minimum down payment of 0% for VA loans, 3% for conventional loans, and 3.5% for FHA loans (PNC does not publish down payment requirements for other loan types).
Types of Loans: Conventional, FHA, VA, USDA, jumbo loans, home equity loans, and specialty loans for medical professionals.

Loan Type:

Conventional: ✓
FHA: ✓
USDA: ✓
Jumbo: ✓
ARM: ✓
Home Equity Loan: ✓
Specialty: ✓ (Community loan, loan for medical professionals)

LoanDepot Loan Lenders

Best to Apply Online

Rating: 4.5
Pre-approval Time: 15 minutes
Mortgage Rates: Similar to the national average
Days to Close: 20 days
Compare Rates: Compare rates from participating lenders in your area through Bankrate.com

Editor’s Opinion: LoanDepot stands out for its hassle-free online application process. Pre-approval can be obtained in as little as 15 minutes, and with Mello Smartloan technology, closing time can be reduced by up to 17 days.

Pros: Pre-approval time as fast as 15 minutes. Mello Smartloan technology can shorten closing time by up to 17 days. Credit requirements are moderate. Refinance Fee Waived for Existing Customers.

Cons: Advertised mortgage rates are higher than the national average. Higher origination fee compared to most. Loan closings can exceed 30 days.

Lender Details:

How to Apply: Apply online. A loan officer will call to explain the next steps, including submitting income documentation and personal identification. Customer service is available on weekdays from 8:00 a.m. to 10:00 p.m. ET and Saturdays from 11:00 a.m. to 6:00 p.m. ET. Pre-approval may take about 15 minutes for those who do not need to provide additional information.
Speed: Mello Smartloan technology can cut closing time by up to 17 days.
Eligibility: Minimum credit score of 620 for Conventional and VA Home Loans, 580 for FHA loans, and 700 for jumbo loans. Minimum down payment of 0% for VA loans, 3% for some conventional loans, and 3.5% for FHA loans.
Types of Loans: Fixed rate mortgages, adjustable rate mortgages, FHA loans, jumbo loans, VA loans, and FHA 203(k) loans. USDA loans are not offered.

Loan Type:

Conventional: ✓
FHA: ✓
USDA: ✗
Jumbo: ✓
ARM: ✓
Home Equity Loan: ✗
Specialty: ✗

Guild Mortgage Loan Lenders

Ideal for Fast Closing Times

Rating: 4.0
Pre-approval Time: 1 to 3 days
Mortgage Rates: Does not disclose publicly
Days to Close: 17-day average
Compare Rates: Compare rates from participating lenders in your area through Bankrate.com

Editor’s Opinion: Guild Mortgage is noted for its quick closing, offering a 17-day closing guarantee for qualified buyers. If Guild Mortgage fails to close on time due to its delay, you’ll receive a $500 credit toward closing costs.

Pros: Minimum credit scores start at 540. Guarantees closing in 17 days. Electronic locking capabilities available.

Cons: Does not disclose current mortgage rates on its website. No home equity loans or HELOCs. No land loans or foreclosure purchase loans.

Lender Details:

How to Apply: Apply online or in person (except for borrowers in New York and New Jersey). Submit documentation electronically through the paperless application process. Pre-approval may take one to three days. Telephone support is available Monday through Friday from 6 a.m. to 5 p.m. Pacific Time.
Speed: 17-day closing guarantee.
Eligibility: Minimum credit score of 540 for FHA and USDA loans; 620 for conventional loans and down payment assistance; 680 for jumbo loans. VA loan credit score information is not disclosed.
Types of Loans: Fixed and adjustable rate mortgages, conventional and jumbo mortgages, FHA, USDA, and VA loans.

Loan Type:

Conventional: ✓
FHA: ✓
USDA: ✓
Jumbo: ✓
ARM: ✓
Home Equity Loan: ✗
Specialty: ✓ (Programa StrongStart; Programa MH Advantage)

Bank of America Loan Lenders

Best for Competitive Interest Rates

Rating: 4.0
Pre-approval Time: 10 days
Mortgage Rates: Below the national average
Days to Close: 30 to 45 days

Compare Rates: Compare rates from participating lenders in your area through Bankrate.com

Editor’s Opinion: Bank of America is chosen for its competitive interest rates and transparency. The bank publishes interest rates and APRs daily, though the rate you receive is influenced by factors like income, credit history, and DTI ratio.

Pros: Potential to qualify for a mortgage with no PMI and a low down payment. Alternative credit information, such as utility and rent payments, is considered. Options to apply online or in person. Several mortgage discount programs are available.

Cons: Does not offer USDA loans. The pre-approval letter takes 10 days.

Lender Details:

How to Apply: Apply online or in person. Customer service is available Monday through Friday, 8:00 a.m. to 10:00 p.m. ET, and Saturdays, 8:00 a.m. to 6:30 p.m. ET.
Speed: Closing time averages between 30 and 45 days.
Eligibility: Minimum credit score of 620; 0% down payment for VA loans, 3% for the Affordable Solution Mortgage, and 3.5% for FHA loans. Alternative credit information is accepted.
Types of Loans: Conventional and jumbo mortgages with fixed and adjustable rate options, FHA and VA loans, and the Affordable Solution Mortgage which does not require private mortgage insurance. USDA loans are not offered.

Loan Type:

Conventional: ✓
FHA: ✓
USDA: ✗
Jumbo: ✓
ARM: ✓
Home Equity Loan: ✓
Specialty: ✓ (Affordable Mortgage Solution)

Mr. Cooper Loan Lenders

Best for Closing Guarantees

Rating: 4.0
Pre-approval Time: 1 to 3 days
Mortgage Rates: Above the national average
Days to Close: 30 to 45 days
Compare Rates: Compare rates from participating lenders in your area through Bankrate.com

Editor’s Opinion: Mr. Cooper is noted for its closing guarantee. If your loan does not close by the agreed-upon date, you will not make your first mortgage payment. For quick closings, Mr. Cooper is a reliable option.

Pros: Low Minimum Credit Score Requirements. Various discount programs are available. Extensive digital support for existing customers.

Cons: Does not offer USDA loans. No physical locations. No home equity loans or HELOCs.

Lender Details:

How to Apply: The application process is completed online. Telephone support is available Monday through Thursday from 7:00 a.m. to 8:00 p.m. CST, Friday from 7:00 a.m. to 6:00 p.m. CST, and Saturday from 8:00 a.m. to 2:00 p.m. CST. Pre-approval takes less than five hours.
Speed: Closing takes between 30 and 45 days.
Eligibility: Minimum credit score of 620 for conventional loans and 580 for FHA loans; 0% minimum down payment for VA loans, 3% for conventional loans, and 3.5% for FHA loans.
Types of Loans: Conventional and jumbo fixed and adjustable-rate mortgages, FHA and VA loans. Does not offer USDA loans, home equity loans, or HELOCs.

Loan Type:

Conventional: ✓
FHA: ✓
USDA: ✗
Jumbo: ✓
ARM: ✓
Home Equity Loan: ✗
Specialty: ✗

Tips for Comparing FHA Loans

When comparing FHA loans, consider the following factors to find the best deal:

Credit Score: Lenders may require a credit score higher than the FHA’s minimum requirement. Most lenders seek a credit score between 580 and 620.
Initial Payment: FHA loans require a minimum down payment of 3.5% with a credit score of 580 or higher. For scores between 500 and 579, a down payment of 10% or more is needed.
Mortgage Insurance Premiums: FHA loans require both an upfront mortgage insurance premium (MIP) and an annual MIP. If you put down 10% or more, you can cancel MIPs after 11 years. With a lower down payment, MIPs must be paid for the loan’s duration.
Debt-to-Income Ratio (DTI): Lenders generally prefer a DTI ratio of 43% or less, though this limit may vary by lender.
Interest Rates: FHA loan rates can vary by lender. It’s advisable to apply with several lenders to compare rates and overall loan costs.
Repairs and Improvements: For homes needing significant repairs or renovations, consider an FHA 203(k) loan instead of the standard 203(b) loan designed for move-in-ready homes.

What is an FHA Loan?

The Federal Housing Administration (FHA) was established during the Great Depression to revive the housing market. The FHA provides mortgage insurance to lenders, making homeownership more accessible for low # and moderate-income borrowers. While the FHA regulates and insures these loans, private lenders provide them.

How Do FHA Loans Work?

FHA loans operate like other mortgages, offering 15 # or 30-year terms with fixed or adjustable rates. Key features include:

Insurance: FHA insures the loan, reducing lender risk if a borrower defaults.
Eligibility: Requires meeting specific credit and income standards and ensuring the home’s value is at least equal to the purchase price.
Costs: Borrowers pay for this insurance through upfront and monthly MIPs.

Types of FHA Loans

FHA Loan for Purchase Used to buy a primary residence with up to four units.
FHA Simplified Refinance Allows refinancing an existing FHA loan without an appraisal or sometimes without income/credit review.
FHA Cash-Out Refinance Replaces your current loan with a larger one, allowing you to take cash out. Requires an appraisal and income/credit review.
FHA 203(k) Loan Provides funds for home improvements expected to increase property value.
FHA Energy Efficient Mortgage # Finances energy-efficient home upgrades, such as new heating systems or energy-efficient windows.

FHA Loan Rates

FHA loan interest rates are often lower than conventional loans due to government backing. However, FHA loans typically come with higher monthly payments because of mortgage insurance. Rates fluctuate daily based on market conditions, so monitor them before meeting with lenders.

FHA Loan Requirements

Credit Score: Minimum of 500. A 3.5% down payment requires a score of 580; a 10% down payment requires a score between 500 and 579.
Down Payment: 3.5% for scores of 580+; 10% for scores between 500 and 579.
Documentation: Proof of income, employment, and compliance with FHA property standards.
DTI Ratio: Must be 43% or less.
Mortgage Insurance: Initial and annual premiums required.
Property Use: Must be the borrower’s primary residence.
Negative Financial Events: No recent bankruptcies or foreclosures.

FHA Loan Limits

FHA loan limits are updated annually to reflect home price changes. As of January 1, 2023:

Standard Limit: $472,030 for single-family homes in most areas.
High-Cost Areas: Up to $1,089,300.
Alaska and Hawaii: $1,633,950.

Higher limits offer more flexibility but depend on credit score, DTI ratio, and down payment.

Pros and Cons of FHA Loans

Advantages:

Low Down Payment: 3.5% vs. conventional loans’ typical 20%.
Flexible Credit Requirements: Accepts scores as low as 500.
Easy Refinancing: FHA Simplified Refinance offers reduced costs and documentation.
Higher DTI Ratio: Up to 50% with higher credit scores or reserves.

Disadvantages:

Mortgage Insurance: Monthly premiums are required, sometimes for the loan’s life.
Initial Premium: 1.75% of the loan amount.
Lower Loan Limits: Generally less than conventional loans.
Primary Residence Only: Cannot be used for second homes or investment properties.

How to Apply for an FHA Loan

Determine Your Budget: Assess your financial situation to set a realistic borrowing limit.
Check Your Credit Score: Improve your credit score if possible to secure better rates.
Gather Documents: Prepare tax returns, bank statements, W-2s, and other necessary documents.
Find an FHA-Approved Lender: Compare rates and terms from multiple lenders.
Submit Applications: Provide required documents and select lenders for comparison.
Compare Loan Estimates: Review loan estimates for interest rates and APRs.
Evaluation Phase: An appraiser will review your financial situation and the home’s value.
Home Appraisal and Inspection: An appraisal determines the home’s market value, while a home inspection is optional but recommended.

The FHA loan process typically takes 30 to 45 days from application to closing.

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Alternatives to FHA Loans

FHA Loan vs. Conventional Loan

FHA Loans: Easier to qualify for, lower credit requirements, but require mortgage insurance.
Conventional Loans: No mortgage insurance with a 20% down payment, often preferred by sellers.

FHA Loans vs. USDA Loans

USDA Loans: No down payment required, lower guarantee fees, but for rural areas only and typically require a credit score of 640.

FHA Loan vs. VA Loan

VA Loans: No down payment or ongoing mortgage insurance is required, but a one-time funding fee applies. Credit score requirements are similar to FHA loans.

Top 6 Best FHA Loan Lenders – Check Out