Key takeaways
To find the best FHA lender, shop around with at least three lenders and compare their loan offers and terms.
Ask FHA lenders about their current rates, if they offer down payment assistance and a rate lock and what kinds of FHA loans they offer, among other questions.
Knowing your credit score, the APR lenders offer and how closing costs work can help you find the best FHA loan 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?
What are the current FHA mortgage rates?
Do you offer down payment assistance?
Is there a rate lock available, how long is it and is there a fee?
Are there any penalties or fees to be aware of?
How long does it typically take to close?
What are the upfront costs?
Do I qualify for an FHA loan?
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.
Keep in mind:
With a low credit score, your lender options will likely be limited. While the hard cutoff for approval of an FHA loan is a credit score of 500, Fleming says some lenders won’t work with you if your credit score is below 580. Others set even higher minimums, so you may need a score of 620 or higher for loan consideration.
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?
Is it hard to get an FHA loan?
Who are the best FHA lenders for bad credit?
