Find information on FHA home loans to buy a new home or refinance and existing a mortgage loan. Learn about government insured FHA home loans with monthly mortgage payments based on fixed mortgage rates or adjustable mortgage rates. Discover how to buy a home with as little as 3.5% down with a FHA home loan. See how these mortgage loans can offer you flexible choices for home buying and refinance opportunities. Compare the mortgage rates on FHA home loans with a 30 year term, 25 year term, 20 year term and 15 year term. Obtain the latest mortgage news on new FHA home loans. For existing home owners searching for a refinances, look into the FHA home loan streamline refinance to compete your transaction quickly and easily or refinance up to 97.75% of your home’s value. Read the latest mortgage loan guides on FHA loans to the help make the best decision for your home financing needs. Find out one of the most popular mortgage loan programs available can make qualifying for a new mortgage easier. Use the FHA home loan resources to determine the best path to obtain a new home, get a lower mortgage rate, or take cash from the existing equity in your home. First time home buyers can start with the FHA home loan mortgage calculators to help compare loan terms and mortgage options.

For additional resources regarding current mortgage rates including and mortgage loans please see:
10 Year Mortgage Rates 15 Year Mortgage Rates
20 Year Mortgage Rates 30 Year Mortgage Rates
FHA Mortgage Rates Jumbo Mortgage Rates

 


Decoding Who Determines the Interest Rate on an FHA Mortgage Loan

The Federal Housing Administration (FHA) does not make home loans rather; they guarantee loans that are made by FHA approved lenders that meet the guidelines established by the FHA.  Since the FHA does not actually originate or make home loans, they also do not establish the mortgage rates on these loans.  Mortgage rates on FHA loans are determined by the individual lenders that are offering the loan to a borrower.  The FHA serves mainly as an insuring agency for mortgage loans that are made by private lenders.  FHA does not regulate or set the interest rate, points or margin on these loans. 

The FHA does have rules in place that can limit certain fees on loans but the rules have no bearing on the interest rate individual lenders set on the FHA loans they may originate.  Under FHA mortgage insurance programs, the interest rate and any discount points are negotiated between the borrower and the mortgage lender. 

FHA loans are available from several types of lenders including banks, credit unions and mortgage companies.  Different lenders may quote different mortgage interest rates and loan costs.  In order to obtain the best mortgage rate and terms for a new FHA loan, new borrowers should contact several lenders to make sure they are getting the best rate and loan terms.  The FHA encourages borrowers to shop around for a mortgage lender and carefully compare the mortgage rates, terms and conditions that may apply to the loan requested.

In order for prospective borrowers to compare mortgage rates and cost accurately and effectively, the borrowers needs to share with each lender the details of their situation and loan request.  FHA loan rates may vary from lender to lender for a variety of reasons and some of the reasons for the rate and cost disparities will be loan dependent such as the loan amount requested, the loan term, the borrowers credit score as well as other loan approval factors.

Benefits of FHA Mortgages to Refinance

An FHA mortgage loan can very well be one of the best options to refinance an existing home loan.  The list of disadvantages are few and there are far fewer conditions that can turn down an FHA application unlike the regular loan applications in which the borrower has meet a variety of qualification standards including minimum credit score and credit history requirements.

The easiest FHA refinance option is the streamline refinance.  FHA streamline is a refinance program for homeowners that currently have an FHA mortgage loan.  The streamline refinancing option is called a streamline because it allows the borrower to reduce the mortgage interest rate on their current home loan quickly and oftentimes without an appraisal.  The FHA streamline refinances also cut down on the amount of paperwork that must be completed by the applicant and the mortgage lender, saving time and money.

The standard requirements needed to qualify for an FHA streamline refinance include a the requirement that the new refinanced loan results in a lower monthly mortgage payment for the borrower, the existing mortgage that is being refinanced cannot be currently delinquent and no cash may be taken out with the new mortgage loan.

The streamline refinance will generally not require any income verification from the borrower or co borrower and an appraisal is not required.  Homeowners who owe more on their mortgage than their house is worth may be eligible to qualify for an FHA refinance.

Mortgage lenders have the option of charging borrowers a slightly higher rate than the standard market rate for an FHA loan and use the premium received to pay any closing costs that borrower would normally be charged for the refinance transaction.

For those borrowers that are looking for something more from their refinance, FHA mortgage refinance can be performed that allow for cash back based on the amount of equity in the home.  FHA refinances, not the streamline program, allow for cash out refinances up to 85% of the value of the home.  Borrowers can use these refinances to consolidate an existing first and second mortgage into a single home loan or for debt consolidation programs.  As with most all FHA loans, refinances with the FHA have easier credit and income qualifications.

All FHA mortgage rates have remained very competitive for borrowers even for borrowers that have filed bankruptcy more than two years ago.  Mortgage refinancing with a FHA loan is relatively easy and can be advantageous for homeowners that have a variety of credit, income and financing needs.

This information is provided for informational purposes, not for specific financial advice.  Additional resources to help consumers find the best mortgage program are available at FHA mortgage rates.

What is the Minimum Credit Score for an FHA Mortgage

Home loan borrowers that want to obtain FHA mortgage loans have various requirements that have to be met in order to be approved for their loan request. Among the rules to qualify for an FHA mortgage loan are requirements for a minimum credit scores.

The Federal Housing Administration (FHA) periodically announces policy changes that establish the underwriting requirements needed to qualify for an FHA home loan including the minimum credit score needed. At the close of 2010, FHA updated the guidelines governing the minimum credit needed to obtain an FHA loan. Mortgage lenders may impose higher standards than those established by the FHA in order to protect themselves from losses on delinquent loans.

Recent guidelines issued by FHA on the minimum credit scores needed for certain FHA guaranteed home loans include the following.

FHA mortgage loan borrowers are required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. Home loan borrowers with less than a 580 credit score can still obtain an FHA loan, however the minimum down payment for those borrowers with a credit score under 580 is 10%.

Mortgage loans applicants who have a minimum decision credit score of less than 500 are not eligible for FHA mortgages.

The FHA also considers mortgage loan applicants that have no credit score but do have a non-traditional credit history. For those borrowers that do not have a credit score and those who do not use traditional credit, the mortgage lender can verify a credit history from non traditional sources such as utility payment records, rental payments, insurance payments, or other similar credit accounts.

These minimum credit score for an FHA mortgage loans were established in 2010 and may change. The FHA is continually reviews loan underwriting standards and loan performance to better assist home buyers as housing market conditions change. The minimum credit score guidelines and underwriting rules allows the FHA to balance risk and provide access for credit to borrowers to help new and existing homeowners.

Additional resources can be found at What is FHA, What is an FHA Loan, FHA Streamline Refinances. and FHA Mortgage Rates.

What is a Streamline Refinance

An FHA streamline refinance is a quick and easy process for refinancing an existing FHA home loan. FHA streamline mortgage loans can be used by homeowners to lower their monthly mortgage payments and mortgage interest rates.

The FHA streamline refinance is designed to reduce the documentation needed to refinance a mortgage loan. The streamline term refers to the amount of documentation and underwriting that needs to be performed by the mortgage lender to complete the transaction.

Some of the conditions that are required to perform an FHA streamline refinance include: the mortgage to be refinanced must be an existing FHA insured home loan, the mortgage loan has to be current regarding the monthly mortgage payments that are due a current delinquency is not allowed, the refinance transaction has to result in a lower monthly mortgage payment for the borrower and there is no cash out for mortgage loans that are refinanced with the streamline refinance process.

Additional conditions for a n FHA streamline refinance cover appraisal rules and mortgage payment histories. An FHA streamline refinance can be done without an appraisal, but the new mortgage loan amount cannot exceed the original loan amount and new FHA home loan borrowers that want to refinance their loan are required to make at least six monthly mortgage payments on the mortgage being refinanced before they can do a streamline refinance.

The FHA has outlined mortgage payment history guidelines for lenders to follow when reviewing a streamline request in addition to the requirement that the mortgage loan be current on the present monthly payment. At the time of the mortgage loan application, the borrower must display an acceptable payment history based on FHA guidelines. For FHA mortgages with less than a 12 months payment history, the borrower must have made all monthly mortgage payments within the month the payment was due. For those borrowers with mortgages that have a 12 months payment history or greater, the borrower must have had no more than one 30 day late payment in the last 12 months,

Borrowers that have a conventional loan, not an FHA home loans, that want to refinance with an FHA loan need to apply with an FHA mortgage lender and go through the standard approval process that requires a standard credit check, employment verification, debt-to-income ratio requirements, an appraisal and other underwriting considerations. Borrowers that have an FHA mortgage and need to do a traditional FHA mortgage refinances because they want cash back or do not meet the other streamline requirements will need to apply for the FHA loan as a traditional refinance transaction with the credit check, appraisal and other standard loan approval requirements.

To apply for a streamline refinance, borrower need to apply to an FHA approved lender. The borrowers current lender may be considered but it is not required that the borrower apply with their existing lender, any bank can be chosen that is FHA approved.

FHA updates their guidelines from time to time to cover changes in the underwriting and approval process. FHA mortgage refinance regulations are often modified to create new rules to control delinquencies and tighten lending guidelines as well as to clarify existing FHA refinance rules.

Additional resources can be found at What is FHA, What is an FHA Loan and FHA Mortgage Rates.

What is an FHA Loan

An FHA loan is a mortgage loan that is insured by the Federal Housing Administration. FHA home loans are not made by the government but are originated by approved FHA mortgage lenders.

FHA home loans are originated similar to other mortgage loans but have some added costs to cover the mortgage insurance from the Federal Housing Administration. The mortgage insurance premium is paid at the closing and may also be included in the monthly mortgage payment depending on the conditions of the loan request.

The main advantages to a FHA home loan are the more lenient credit qualification requirements and the lower down payment requirements. FHA loans used to purchase a new home can be obtained with as little as a 3.5 percent down payment. In general, the credits scores needed to qualify for an FHA loans are lower than those found with conventional or traditional mortgage loans. Home loans borrowers that do not have a traditional credit history may also qualify for an FHA home loan. The credit qualifications for an FHA loan change from time to time and may vary from mortgage lender to mortgage lender.

The real value of FHA home loans is that they allow home buyers that might otherwise not qualify for a home loan obtain a loan because the insurance provided by the FHA to the approved mortgage lender protects their downside risk. Without the mortgage insurance, mortgage lenders are not likely to offer loans with relaxed credit conditions and low down payment requirements.

FHA loans are available to most all borrowers. The FHA loan programs have very few restrictions with the exception of a limit on the maximum loan amount. A borrower does not have to a first time home buyers to obtain an FHA loan. An FHA home loan can be used to purchase a home or refinance a home.

Existing mortgage holders that want to refinance their home loan do not have an FHA loan presently. FHA home loans for refinances can be for rate and term refinances or cash out refinances. FHA loans are available for 1-4 family owner occupied properties.

The underwriting and approval process for FHA home loans is almost identical to the process for conventional mortgage loans. Home loan borrowers will be evaluated on the down payment amount relative to the home value or LTV, the borrower’s credit score and credit history, the borrower’s income and debt ratios and the assets and liabilities of the borrower.

The structure of an FHA loan is also nearly identical to conventional mortgage loans. FHA home loans can be obtained with a fixed mortgage rates or adjustable mortgage rates. The term of the FHA loan can be between 15 years to 30 years in length. The monthly mortgage payment will vary based on current mortgage interest rates when you apply, with each mortgage lender establishing their own mortgage rates.

Additional resources can be found at What is FHA and FHA Mortgage Rates

What is FHA

FHA is an acronym for The Federal Housing Administration. The Federal Housing Administration or FHA provides mortgage insurance or guarantees on mortgage loans that meet the requirements established by FHA and are originated by an approved FHA mortgage lender.

FHA insures mortgages on owner occupied single family and multifamily homes. FHA does not make the home loans. FHA insures mortgage loans made by private mortgage lenders including banks. There are FHA approved mortgage lenders throughout the United States in all 50 states including some of the nation’s largest banks and small independent mortgage companies.

Each approved FHA mortgage lender sets its own mortgage rates and terms, FHA does not establish loan rates and costs. There are some limitations on the costs that are established by FHA, but comparison shopping for FHA loans is as important as it is with any mortgage loan.

Along with underwriting or loan approval guidelines established by FHA, FHA loans have a mortgage insurance cost that is paid by the home loan borrower. The FHA mortgage insurance is paid by the home loan borrower in the form of a Mortgage Insurance Premium that is added to either the monthly mortgage payment and/or as a lump sum payment at the time of the loan closing.

The mortgage insurance on FHA loans provides the mortgage lenders with protection against losses that may result from the homeowners defaulting on the mortgage loans. All FHA loans must meet certain requirements established by FHA to qualify for insurance and be insured by the government agency.

The Federal Housing Administration was created by Congress in 1934. In 1965, the Department of Housing and Urban Development (HUD) was formed as a Cabinet level government agency. The FHA became part of the Department of Housing and Urban Development’s Office of Housing. Per the U.S. Department of Housing and Urban Development web site, the mission of HUD is to:

HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business.

To find current FHA mortgage rates see FHA Mortgages.