Best FHA Mortgage Lenders 2019

Yes, you can own a home. With the right FHA lender, get a low down payment and
your foot in the door.

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This site is a free online resource that strives to offer helpful content and comparison features to its visitors. Please be advised that the operator of this site accepts advertising compensation from companies that appear on the site, and such compensation impacts the location and order in which the companies (and/or their products) are presented, and in some cases may also impact the rating that is assigned to them. To the extent that ratings appear on this site, such rating is determined by our subjective opinion and based on a methodology that aggregates our analysis of brand market share and reputation, each brand's conversion rates, compensation paid to us and general consumer interest. Company listings on this page DO NOT imply endorsement. Except as expressly set forth in our Terms of Use, all representations and warranties regarding the information presented on this page are disclaimed. The information, including pricing, which appears on this site is subject to change at any time.

What are FHA Mortgage Loans?

FHA home loans are government-backed mortgage loans that give Americans with low credit scores or a lack of funds the opportunity to purchase a home with only a small down payment. 

As opposed to a traditional loan, 3 parties are involved in an FHA home loan: 

  • Borrower
  • Lender
  • Federal Housing Administration (FHA)

The FHA’s involvement provides security for both sides, reducing the lender’s risk and helping the borrower get approved for the loan. 

Why Take out an FHA Mortgage Loan?

From a home buyer’s perspective, the main reasons to apply for an FHA home loan are:

  •  If you’ve been rejected by traditional lenders
  •  If you don’t have sufficient money for a 20% down payment

FHA home loans provide borrowers suffering from a poor credit rating with a path to homeownership for a down payment of 10% or less. Active and former members of the Military, National Guard, and Reserves who suffer from poor credit or a lack of funds can apply for a VA loan. For anyone else who can’t get approved for a conventional mortgage, an FHA mortgage loan is usually the best type of loan for getting into the housing market. FHA loans are especially popular with first-time homebuyers, with 82% of first-time borrowers using an FHA loan in 2017.

How do FHA Home Loans Work? 

FHA mortgages are fixed-rate loans that the borrower must repay over a period of usually 15 or 30 years. These are the main points of difference between an FHA loan and conventional loan:

1) Low down payment: Under Federal Housing Administration rules, lenders can offer 2 tiers of FHA loans. Home buyers with a 580-619 credit score may take out an FHA loan with only a 3.5% down payment. Home buyers with a 500-579 credit score may take out an FHA loan with a 10% down payment. 

2) Private Mortgage Insurance: All borrowers must pay monthly PMI until they have paid off at least 20% of the value of their home. PMI consists of an upfront payment of 1.75% of the loan amount, plus an annual premium that varies from 0.45%-0.85% depending on several factors.

3) Maximum loan amounts: The FHA sets a maximum loan amount for each part of the country, based on median home prices for the area. In 2019, the maximum loan amount stands at $679,509 in the highest cost areas (located mostly in the Los Angeles, San Francisco, New York, and Washington, D.C. metro areas). The maximum stands at $294,515 in the lowest-cost areas.

What are the Pros and Cons of FHA Loans?

ProsCons
Low credit score requirementsMonthly PMI
Low down paymentsMore paperwork
Higher debt-to-income ratio allowedNot all properties qualify

The main benefits of an FHA home loan are that it carries far lower credit and down-payment requirements than a conventional loan. There are a few catches, namely that the borrower must pay monthly PMI (to insure the lender in the event of default). The borrower must also provide documentation to prove they meet all the additional FHA requirements. For example, total monthly payments must not exceed 30% of the borrower’s gross monthly income; and borrowers must not have filed for Chapter 7 bankruptcy in the past 2 years or Chapter 13 bankruptcy in the past year.

How to Choose the Best FHA Mortgage Lender

As with a regular home loan, there are many factors to consider when deciding which lender to apply to for an FHA home loan.

  • What interest rate is being offered? 

Whether you’re shopping around for an FHA loan, conventional home loan, or any other type of loan, always compare the interest rate and APR offered by the different lenders. FHA mortgages are fixed rate, meaning the rate stays the same over the entire term. The lower the APR, the less you’ll pay over a 15-year or 30-year term. A 0.05% or 0.10% difference between rates mightn’t sound like much, but this could translate to thousands or tens of thousands of dollars over the life of your loan.

  • What additional fees are there? 

Like a regular mortgage, FHA home loans can carry closing costs ranging from around 2%-5% of the value of the loan. Closing costs can vary significantly between lenders, so in addition to comparing APRs, it is always worth asking for an estimate of closing costs before deciding.

  • What level of customer service does the lender offer? 

Like with any big loan, it’s important to read up about the lender and check them out online or by phone before signing below the dotted line. When comparing lenders, check to see that they have expertise in providing FHA mortgage loans, that their online reviews are mostly positive, and that they have an open door when it comes to communication.

FHA Mortgage Loans vs Other Low Down-Payment Options

If FHA loans aren’t your thing, here are some government-backed or conventional loan options to consider.

Government-backed loans: Active and former members of the U.S. Military, National Guard and Reserve, as well as spouses of veterans who died in service or as a result of a service-related injury, may take out a VA loan provided they meet the other eligibility requirements. With a VA loan, a borrower can purchase a house for little or no down payment and without having to pay PMI, although there are some trade-offs, including the need to pay certain closing costs.

Conventional loans: If you’re purchasing your first house or have low to moderate income, your lender might be able to offer one of Fannie Mae’s My Community Mortgage loans for a down payment of as low as 3%. Like FHA loans, these loans require the borrower to pay PMI, but other conditions vary—meaning that in certain cases, the loan could work out cheaper than an FHA loan.

The Top Lenders for FHA loans

LendingTree 
LendingTree

  • Compare multiple FHA mortgage lenders

  • Lower rates than direct lenders

  • Pre-qualify in minutes

LendingTree is an online marketplace that allows users to compare and prequalify for mortgage products from dozens of top lenders with just one online form. The service is completely free to use, and home buyers can use it to apply for FHA home loans or any other type of mortgage loan. After filling out a short online form, you’ll be brought to a screen displaying your best loan offers. Simply select your preferred option and the lender will get in touch with you to complete your application.

Standout feature: All-in-one online form for comparing the best FHA mortgage lenders

J.G. Wentworth
J.G. Wentworth

  • Experienced FHA mortgage lender

  • Digital application process1

  • Stacks of useful materials on website

J.G. Wentworth is an experienced online mortgage lender that provides borrowers with access to all type of home loans, including FHA loans. Thanks to its digital, streamlined application process, borrowers can apply for and get approved for an FHA mortgage loan without ever having to leave the comfort of their own home. Should you encounter any issues, you’ll always have the option of speaking to J.G.’s knowledgeable mortgage advisors by phone.

Standout feature: Smooth electronic application process

CrossCountry
CrossCountry

  • Offers additional FHA home loans for repairs

  • Streamlined application process

  • Provides plenty of free tools and resources

In addition to standard FHA mortgage loans, CrossCountry Mortgage is one of only a handful of lenders authorized to provide the 2 types of FHA 203(k) loans for home improvements and repairs. The 2 types of loans are Streamline, in which the borrower finances up to $35,000 in renovations for certain eligible repairs; and Standard, in which the borrower finances a minimum of $5,000 in repairs with no maximum (although the repairs must be approved by the appraiser). 

Standout feature: FHA 203(k) loans for home improvements