FHA Mortgage Rates Today

Today’s rates for a 30-year, fixed-rate FHA loan start at % (% APR), according to The Mortgage Reports’ daily rate survey.

Thanks to their government backing, FHA loan rates are competitive even for lower-credit borrowers. But interest rates can vary a lot from one lender to the next, so be sure to shop around for your best offer.

FHA mortgage rates for today, December 24, 2024

What is an FHA loan?

FHA loans are mortgages backed by the Federal Housing Administration (FHA), an arm of the federal government. “Backed” means the government insures your lender for part of your loan. So your lender will get some of its money back in case of loan default.

This insurance, often referred to as the FHA ‘guarantee,’ lets lenders approve FHA loans for borrowers with only fair credit and a relatively small down payment.

It’s why these home loans are so popular with first-time buyers and those who have issues in their credit history.

FHA mortgage requirements

Of course, lenders won’t approve just anyone. You’ll have to meet or exceed a few minimum requirements to qualify for an FHA home loan. These include:

1. Down payment of 3.5% of the purchase price or higher
2. Minimum FICO credit score of 580 (note, some lenders set a higher minimum credit score of 620-660)
3. Maximum debt-to-income ratio (DTI) of 50%
4. Solid employment record that shows you have a reliable income
5. Intention to live in the home as your primary residence
6. No foreclosures no the past three years

It may be possible to get approved for FHA financing with a credit score in the 500-580 range, but only if you have a down payment of 10% or more. And you’ll have a harder time finding lenders that accept these scores.

In addition, your mortgage can’t exceed FHA’s loan limits, which currently max out at $ for a single-family home in most of the U.S. Loan limits are higher in select areas with high-priced real estate.

If your loan amount exceeds FHA’s limit, you’ll need to qualify for a conventional loan, or potentially a jumbo loan.

How low are FHA mortgage rates?

FHA loans have very competitive rates, at least on the surface.

Looking at loan options side by side, you might note that FHA mortgage rates are close to conventional rates. Usually they’re even lower.

However, there’s a big caveat to those low FHA interest rates. And that’s mortgage insurance.

Mortgage insurance premium or ‘MIP’ is required on all FHA loans. It costs 1.75% of the loan amount upfront and 0.85% per year (broken into 12 monthly payments). This effectively increases the rate you’re paying by nearly a full percentage point.

Mortgage insurance isn’t the same as interest, of course. But it affects the overall cost of your loan.

Don’t think FHA borrowers are being singled out. Nearly everyone with a down payment smaller than 20% has to pay some form of mortgage insurance, though it’s called private mortgage insurance (PMI) on conforming loans from Fannie Mae and Freddie Mac.

When you’re shopping for rates, you should explore all your options and pay attention to the cost of mortgage insurance as well as your mortgage rate.

If you have a higher credit score with less than 20% down, you’re may find conventional PMI much cheaper. But if your score is in the 580 to 620 range, an FHA loan is likely your best (and only) option.

See how FHA mortgage rates compare

What types of FHA loan rates are available?

FHA loans come in various flavors. You can choose the traditional 30-year fixed-rate mortgage or a 15-year loan term. You also have the option between a fixed- or adjustable-rate mortgage.

15- or 30-year term

The less time you’re paying interest, the less interest you’ll pay. Shorter-term loans also come with lower interest rates. So choosing the 15-year FHA mortgage is a great way to save money — but only if you can afford it.

The catch is that payments on a 15-year fixed-rate mortgage are much higher. That’s because you need to pay off the same loan amount in half the time.

Check your options for both the 30- and 15-year FHA loan. If you can afford monthly mortgage payments on a 15-year loan, it’s certainly worth considering. But if not, you’re in good company along with the majority of Americans who use 30-year mortgages.

Fixed- or adjustable-rate

Adjustable-rate mortgages (ARMs) pretty much always have lower initial mortgage rates than fixed-rate loans.

In fact, if you look at average rates since 2005, ARM rates have typically been about 0.6% lower than fixed mortgage rates. So what’s going on here?

Well, that initial ARM rate — the one you’ll see advertised — is fixed only for a set period.

A 5/1 ARM has a fixed rate for five years, a 7/1 ARM for seven years and a 10/1 ARM for 10 years. The “1” in each case means the rate can change every one year after the initial fixed period ends.

That means while you start out with a lower interest rate and payment, both could increase later on if rates start to rise. These loans are a lot riskier than fixed-rate mortgages, which guarantee your rate and monthly payment will stay the same.

An adjustable-rate FHA mortgage is typically only best if you’re certain you’ll move or refinance before the initial fixed-rate period expires.

FHA refinance rates

Typically, FHA rates are the same or similar whether you’re buying a home (a purchase mortgage) or refinancing.

So, if you’re seeing FHA rates lower than the one you’re currently paying, it’s worth exploring your refinance options.

There are two main refinance programs for FHA homeowners:

• FHA Streamline Refinance — Lets you refinance an existing FHA loan to a new one with a lower interest rate and monthly payment. “Streamlined” means there’s limited paperwork; no home appraisal is required, and the lender may not need to verify your credit, income, or employment. Learn more about the FHA Streamline program here
• FHA cash-out refinance — The FHA cash-out loan allows you to tap your home equity by taking out a new mortgage for more than you currently owe on the home. You can learn more about the FHA cash-out program here

Many borrowers think twice before using the FHA cash-out refinance, because there’s another good option for FHA homeowners with lots of equity.

If you have more than 20% equity in your home — and a credit score above 620 — you could potentially use a conventional cash-out refinance instead. You might walk away with a check in hand and eliminate mortgage insurance payments.

FHA mortgage rates vs. conventional loan rates

FHA mortgage rates are typically lower than conventional loan rates, or at least very close to them. But it’s hard to compare conventional and FHA interest rates on equal footing because of the difference in mortgage insurance.

FHA mortgage insurance premium (MIP) costs the same amount for every borrower: a 1.75% upfront fee (typically added to the loan amount) and a 0.85% annual fee (paid monthly).

But conventional private mortgage insurance (PMI) and the interest rate itself are charged on a sliding scale: the bigger your down payment and the higher your credit score, the less you’re going to pay.

That means someone with a low down payment but very high credit could likely get a low PMI rate and save money compared to an FHA loan. But someone with the same down payment and bad credit could pay 1.25% of their loan balance per year for PMI — more expensive than FHA’s 0.85%.

Payment assumes $250,000 loan. Rates are for example purposes only. Your rate will be different.

Be sure to compare all your loan options. If your credit is high enough to qualify for a conventional mortgage (620+), look at the total cost of interest and fees compared to an FHA loan, and choose the one with the best combination for you.

Your loan officer can help you compare loan types and find the best option.

FHA mortgage rates vs. USDA and VA loan rates

FHA loans aren’t the only mortgages backed by the federal government. There are two other types:

1. VA loans – Available to veterans, current service members and some very exclusive and closely related groups, such as surviving spouses of those killed or missing in action. Backed by the Department of Veterans Affairs (VA)
2. USDA loans – Available to homebuyers with average or below-average income for their area who want to buy in designated rural census tracts. Backed by the U.S. Department of Agriculture (USDA)

Like the FHA loan program, USDA and VA loans have lenient requirements and low interest rates thanks to their federal backing.

The big difference: neither program requires a down payment, whereas FHA mortgages require at least 3.5% down.

If you meet the eligibility guidelines for VA or USDA financing, these programs are definitely worth looking into further.

APRs and loan estimates

One trick when assessing which loan is best for you is to look at the annual percentage rate (APR) on each offer rather than the mortgage rate alone.

APR accounts for the total cost of a mortgage loan, including PMI or MIP mortgage insurance. It’s a more holistic estimate of what you’d pay per year.

But an even better way to see the reality behind your rates is to compare Loan Estimates. Lenders are legally obliged to send one of these to each applicant. And you’ll want several to assess the different deals you’re offered.

All Loan Estimates use the same format so you can easily compare them side by side. And page 3 is often the most revealing; it tells you precisely how much you’ll pay in the first five years of the loan, and how much of that will go to reducing your mortgage balance, as opposed to interest payments and mortgage insurance premiums.

FHA mortgage rates FAQ

By refinancing an existing loan, the total finance charges incurred may be higher over the life of the loan.