Current interest rates for fha mortgage loans

A Federal Housing Administration (FHA) loan is a government-backed home mortgage loan with more flexible lending requirements than conventional loans. Because of this, FHA mortgage interest rates may be somewhat higher. The buyer will also have to pay monthly mortgage insurance premiums, along with their monthly loan payments. FHA loans come in 15- and 30-year options. Check out today’s 30-year FHA rates.

FHA mortgage insurance

The Federal Housing Administration (FHA) insures FHA loans. The FHA qualification process may be easier because it has more flexible down payment and credit requirements. If you're a current military member or veteran, you may be eligible for a VA home loan with little or no down payment.

FHA loan requirements and qualifications

• FHA loan limit - FHA home loans have maximum mortgage limits that vary by state and county.
• FHA down payment - FHA loan guidelines require a minimum down payment of 3.5 percent.
• FHA property requirements - FHA loans require that the home being purchased meets certain conditions and is appraised by an FHA-approved appraiser. New FHA loans are available only for homes that will be used as the buyer’s primary residence.
  • Have been appraised by an FHA-approved appraiser
  • Will be used as the buyer’s primary residence (where the buyer lives)
  • Protect the health and safety of the occupants
  • Protect the security of the property
  • Do not have physical deficiencies or conditions affecting its structural integrity

An FHA mortgage may be right for you if your credit does not meet the requirements for a conventional loan, or if you have limited cash for a down payment. Compare mortgage options to learn more, or contact a mortgage loan officer for help deciding which mortgage option is right for you.

Optimal Blue Mortgage Market Indices  

Units:  Percent, Not Seasonally Adjusted

Frequency:  Daily

Notes:

This index includes rate locks from Federal Housing Authority loans.

Optimal Blue Mortgage Market Indices™ (OBMMI™) is calculated from actual locked rates with consumers across over one-third of all mortgage transactions nationwide. OBMMI includes multiple mortgage pricing indices developed around the most popular products and specific borrower and loan level attributes.

Each index is calculated as the average of all appropriate rate locks locked through the Optimal Blue product eligibility and pricing engine on a given day. More details about methodology and definitions are available here.

Suggested Citation:

Optimal Blue, 30-Year Fixed Rate FHA Mortgage Index [OBMMIFHA30YF], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/OBMMIFHA30YF, December 8, 2022.

NerdWallet’s mortgage rate tool can help you find competitive FHA mortgage rates tailored to meet your needs. In the “Refine results” section, enter a few details about the type of loan you’re looking for (make sure you choose "Yes" under "Eligible for an FHA loan?") and you’ll get a customized interest rate quote in moments, without providing any personal information. From there, you can start the process of getting your FHA loan and be on your way to making offers. It’s that easy.

Do FHA loans have lower interest rates?

An FHA loan is a mortgage the Federal Housing Administration insures. FHA loans have relaxed lending standards to help borrowers who don’t qualify for a conventional mortgage, but they do not typically have lower interest rates. Credit score has a bigger impact on mortgage rates than loan type. If you have a high credit score, your FHA loan rate will probably be lower than that of someone with a low credit score.

What is a good FHA interest rate?

Many factors influence the mortgage rate you’re offered, from forces that are pretty much out of your control (like the economy) to your personal financial details. The best way to find out if you’re being offered a good FHA loan interest rate is to apply with multiple lenders. That way, you can compare loan offers and determine which has the best combination of rate and fees.

Do FHA interest rates vary by lender?

Yes, FHA loan rates vary by lender, so it can pay to comparison shop. Once you’ve found a few lenders that seem right for you, compare each one.

If you’re approved, each lender will provide you with a Loan Estimate form. This will let you compare not only FHA mortgage rates, but also origination fees, closing costs and everything else you’ll pay over the life of the loan. Comparing loan estimates from more than one lender will give you confidence that you’re getting a good rate and that you’re getting the right loan for your situation.

Are FHA loans fixed-rate?

Though the vast majority of FHA loans are 30-year, fixed-rate mortgages, other options are available, including both shorter-term fixed-rate mortgages and adjustable rate mortgages (ARM). In recent years, fixed-rate mortgages have been much more common, as home buyers have sought to lock in low interest rates. But if you don’t plan to stay in the home long, an ARM may be worth a look.

• An FHA loan is a good option for first-time homebuyers who need a low down-payment requirement. If you qualify, you can get a mortgage with as little as 3.5% down.

• FHA loans are also beneficial for those who have weak or damaged credit. Some FHA mortgage lenders allow credit scores as low as 500, though a higher score will decrease your down payment requirement. If you’ve had financial difficulties in the past or you just haven’t had time to build a strong history of on-time payments, an FHA loan could be the answer to your mortgage needs.

• Not only can FHA loans be used to buy detached single-family homes, multifamily homes, townhomes and condos, they can also be used to buy manufactured and mobile homes. And a variation of the FHA loan, called the 203(k), allows you to finance both a home purchase and necessary renovations with the same mortgage.

• The biggest drawback of FHA loans is that you’ll have to pay FHA mortgage insurance. This protects the lender’s stake in the loan if you default, but the premiums increase your monthly payments. And unlike with private mortgage insurance on a conventional loan, FHA mortgage insurance can’t be canceled.

• Homes and condos purchased with FHA loans must meet HUD’s minimum property requirements. This means you’ll be required to pay for an FHA appraisal, which is more rigorous than a conventional appraisal and separate from the home inspection.

How are mortgage rates set?

At a high level, mortgage rates are determined by economic forces that influence the bond market. You can’t do anything about that, but it’s worth knowing: Bad economic or global political worries can move mortgage rates lower. Good news can push rates higher.

What you can control are the amount of your down payment and your credit score. Lenders fine-tune their base interest rate on the risk they perceive to be taking with an individual loan.

So their base mortgage rate is adjusted higher or lower for each loan they offer. Higher mortgage rates for higher risk; lower rates for less perceived risk.

So the bigger your down payment and the higher your credit score, generally the lower your mortgage rate.

What’s the difference between interest rate and APR?

The interest rate is the percentage that the lender charges for borrowing the money. The APR, or annual percentage rate, is supposed to reflect a more accurate cost of borrowing. The APR calculation includes fees and discount points, along with the interest rate.

APR is a tool used to compare loan offers, even if they have different interest rates, fees and discount points.

A major component of APR is mortgage insurance — a policy that protects the lender from losing money if you default on the mortgage. You, the borrower, pay for it.

Lender usually require mortgage insurance on conventional loans with less than 20% down payment (in a home purchase) or less than 20% equity (in a refinance).

FHA loans have different mortgage insurance requirements. Borrowers have to pay an upfront mortgage insurance premium equal to 1.75% of the total loan amount, regardless of the down payment amount. If you put down less than 10%, you’ll pay FHA mortgage insurance for the life of the loan. If you pay 10% or more, you’ll make insurance payments for 11 years.

You can look at the table above to see the current FHA interest rate and APR for a 30-year, fixed-rate mortgage.

What is the typical interest rate on an FHA loan?

What is the best FHA rate today?

Does FHA have higher interest rates?

What is the lowest FHA interest rate?