How To Find The Best FHA Mortgage Lender

An FHA loan offers financing to buy a home with a low credit score, as little as a 3.5 percent down payment and a cap on closing costs. But how do you find these miraculous mortgages? Here’s everything you need to know about finding the best FHA lender for you.

How to find the best FHA loan lender

There are several strategies you can use to find the best FHA lender, including:

• Searching the HUD lender list: The Federal Housing Administration insures these loans, but a private lender offers and underwrites them. You can search for a list of FHA-approved lenders on the Department of Housing and Urban Development’s website (HUD oversees the FHA). Banks and mortgage companies often display their FHA affiliation in ads, too.
• Checking with your existing bank or credit union: Your favorite bank or credit union might already be an FHA loan provider, so it’s worth checking with them, too.
• Comparing loan offers from multiple lenders: Compare your all-in FHA mortgage costs with at least three top FHA loan lenders. And because it can be tough, if not impossible, to eliminate the ongoing mortgage insurance premiums on FHA loans, also consider a mortgage lender who can help you compare the long-term costs of FHA loans versus conventional loans.
• Working with a mortgage broker: It might be helpful to enlist a mortgage broker specializing in FHA loans, says Casey Fleming, a mortgage originator team mentor and author of “The Loan Guide: How to Get the Best Possible Mortgage.” A broker should know the criteria and strategies to get your application approved. They might also have access to lenders who don’t work retail — that is, directly with the public — but only through intermediaries like themselves.
• Reading online reviews: It’s also helpful to read lender reviews to understand how they rank in terms of affordability, availability, borrower experience and more. Not sure where to start? Bankrate’s experts have identified the best FHA lenders, which can help with your search.

Questions to ask FHA mortgage lenders

• Which FHA loan is best for me?
  

  There are almost a dozen different FHA loan programs. Your lender should tell you which options will be best for you and the pros and cons of each.

  • Basic home mortgage loan: You can use this loan to buy a one- to four-unit structure you plan to use as your primary residence.
  • FHA adjustable-rate mortgage: Also used to purchase a primary residence, an FHA adjustable-rate mortgage is a type of home loan with an interest rate that changes over time. ARMs begin with a lower fixed rate that lasts from three to 10 years. After that, the rate periodically adjusts.
  • Home equity conversion mortgage (HECM): The HECM is a type of reverse mortgage that enables homeowners to withdraw a portion of their home equity to cover home maintenance costs, repairs or even general living expenses.
  • FHA 203(k) rehab loan: The 203(k) rehab loan is a type of FHA construction loan designed for buying homes that need work. These loans provide buyers with financing for purchasing and renovating a home.
  • FHA energy-efficient mortgage: You can use the funds from an energy-efficient mortgage to pay for various efficiency projects and upgrades. Borrowers using this type of loan must obtain a home energy assessment, which provides recommendations for energy-saving projects.

• What are the current FHA mortgage rates?
  

  Are the lowest available rates quoted to borrowers updated daily or weekly? It’s vital to know where FHA loan rates stand before applying to determine if the lender is offering an attractive rate and how it stacks up to the competition.

• Do you offer down payment assistance?
  

  Prospective homebuyers who are struggling to save money for a down payment may benefit from down payment assistance programs. FHA down payment assistance programs, which are available from select lenders nationwide, provide loans or grants to help with this cost.

• Is there a rate lock available, how long is it and is there a fee?
  

  Many lenders let you lock in your interest rate for a set period while you’re shopping for a home. This can make the cost of your mortgage more predictable and could be a smart financial move, especially considering mortgage rates have been trending upward.

• Are there any penalties or fees to be aware of?
  

  Some lenders charge a prepayment penalty if you pay the loan off early or refinance. There could be other fees and penalties the lender imposes, too, so be sure to inquire about loan origination, transaction and settlement fees as well.

• How long does it typically take to close?
  

  If you’re on a tight timeline, you’ll want to find a lender who can close quickly or on your schedule. Different types of loans have different closing timelines. As of March 2025, an FHA purchase loan takes 40 days to close, according to ICE Mortgage Technology.

• What are the upfront costs?
  

  Ask your lender what closing costs you’ll have to pay, and whether you’ll need to pay mortgage points to get the rate you were quoted.

• Do I qualify for an FHA loan?
  

  If you have a credit score of 580 or higher, a 3.5 percent down payment and are buying a primary residence, you may qualify for an FHA loan. If you can put 10 percent down, you might be able to apply with a credit score as low as 500. Ask lenders if you meet their individual qualifications.

Tips for finding the best FHA lender

In addition to knowing the right questions to ask potential lenders, here are some tips for how to find the best FHA lender for your needs.

Know your credit score

It’s crucial to know your credit score before you apply for an FHA loan. For one, your score might be better than you think — even good enough for you to qualify for a conventional mortgage.

If your credit score is in the murky area between 500 and 579, where you’ll need to put at least 10 percent down, you might need to improve your credit before you apply if you don’t have that much cash on hand.

Understand how closing costs work

FHA-approved lenders are limited to charging no more than 2 to 6 percent of the loan amount in closing costs. These costs may include the:

• Appraisal fee
• Origination fee
• Credit check fee
• Title search and insurance
• Mortgage insurance premiums
• Rate lock fee
• Mortgage points

The FHA also allows sellers, home builders and lenders to cover up to 6 percent of your closing costs. If the lender is rolling the closing costs into your loan amount, which is another possibility, you’ll likely pay a higher interest rate and have a higher loan balance.

Within three days after applying for your FHA loan, you’ll receive a loan estimate. To find how much the lender is charging, look under the “Closing cost details” section at “Origination charges.” These fees differ by lender and might be negotiable.

If you think you’ll need help, keep in mind you could qualify for down payment assistance or help with closing costs. There are also state and local mortgage programs that you can pair with an FHA loan to help you cover some of the upfront costs of purchasing a home.

Know your APR

Finally, don’t forget to measure the impact of the APR, or annual percentage rate, for which you qualify. Remember, there’s a difference between the interest rate and APR. It’s easy to assume FHA loans would all have the same APR, but this couldn’t be further from the truth.

“The FHA doesn’t set interest rates or fees,” says Fleming. “Each lender can set their own, so there can be quite a lot of variance between lenders.”

You’ll find the interest rate the lender is charging on the front page of your loan estimate under “Loan terms.” The APR is on the third page under “Comparisons.”

Bankrate’s mortgage APR calculator can help you determine the long-term costs of your mortgage and how it might stack up to other offers.

Important considerations before getting an FHA loan

Buying a home with only 3.5 percent down and a competitive interest rate might seem like a dream come true, but it’s important to note FHA loans, despite their generous terms, have some downsides. The drawbacks of FHA loans include:

• They require you to pay mortgage insurance premiums (MIP). There’s an upfront MIP of 1.75 percent of the loan amount, which is paid when you get the loan. Then there’s an annual MIP that varies from 0.45 percent to 1.05 percent, depending on the loan term, loan amount and the loan-to-value (LTV) ratio.
• You might have to pay MIP for decades. If you put down less than 10 percent, you won’t be able to cancel the annual MIP — you’ll pay it for the life of the loan. However, if you put down 10 percent or more on an FHA loan, you can have the mortgage insurance removed after 11 years. Another way to remove FHA mortgage insurance is to refinance your FHA loan into a conventional mortgage when you have at least 20 percent equity in your home.
• There’s a limit to how much you can borrow. For 2025, those limits are $524,225 for a single-family home. Higher-cost areas have a maximum limit of $1,209,750.

Bottom line

If you’re looking for an FHA lender, start by reaching out to your bank or credit union. Then, you can search the HUD database to find other FHA lenders in your area. Once you’ve identified a few contenders, check each company’s online reviews and compare their offers to make sure you’re getting the best rates and loan terms.

FAQs

• Who are the largest FHA mortgage companies?
  

  In 2024, the five largest FHA mortgage companies by volume were Pennymac, AmeriHome Mortgage Company, Planet Home Lending LLC, Newrez and CrossCountry Mortgage, according to Scotsman Guide.

• Is it hard to get an FHA loan?
  

  Qualifying for an FHA loan is typically easier than getting a conventional loan due to the lower credit score requirements. FHA loans also have low down payment minimums, which can be especially helpful for first-time buyers.

• Who are the best FHA lenders for bad credit?
  

  FHA loans are available to people with credit scores as low as 500, but there are also specific mortgage lenders that cater to borrowers with poor credit. Some of the best lenders for bad credit include Wells Fargo, Bison State Bank and New American Funding.