Best FHA Loan Lenders Of 2025

Forbes Advisor compiled a list of FHA loan lenders that excel in various areas, including offering competitive loan options, a flexible application process and hands-on help. Mortgage rates for each lender were based on recently advertised market rates and compared to the national average. The lenders we included on this list had a minimum four-star rating.

To choose the best FHA loan, consider these factors when shopping around with different lenders:

• Credit score. Lenders may require a credit score higher than the FHA’s minimum requirement. Most lenders require a credit score between 580 and 620.
• Down payment. It’s possible to put down as little as 3.5% with a minimum credit score of 580 when using an FHA loan. A 10% down payment or higher is necessary with a credit score between 500 and 579.
• Mortgage insurance premiums. All FHA loans charge upfront and annual mortgage insurance premiums (MIPs), although the amount differs depending on how much you put down. If you put 10% down, you can cancel MIPs after the first 11 years; any less, and you’ll have to MIPs for the life of the loan.
• Debt-to-income ratio. Lenders prefer a debt-to-income (DTI) ratio at or below 43%, although the limit can vary by institution.
• Interest rates. FHA loan rates vary by mortgage lender. It’s worth the effort to apply to several lenders and see what type of rate you qualify for. Further, use this opportunity to compare fees to forecast total borrowing costs.
• Repairs and improvements. Properties needing extensive repairs or renovations before moving in may require an FHA 203(k) loan instead of the standard 203(b) loan that’s intended for move-in ready homes.

The FHA is a government agency that came into being during the Great Depression, when home lending froze and new construction stalled.

The FHA’s mission is to improve the quality of the country’s housing stock and provide mortgage insurance to lenders to make homeownership for low- to moderate-income borrowers more accessible, helping prospective home buyers get into homes for less money upfront.

Though the FHA insures and regulates FHA loans, it doesn’t do the actual money-lending. Approved private lenders provide FHA loans to borrowers, and the FHA regulates and insures those loans. Anyone can apply for FHA loans, though they tend to be popular among those who can’t get approved for a conventional mortgage.

FHA loans work much like any other mortgage. You can get a 15-year or 30-year loan term with a fixed or adjustable interest rate from an approved FHA mortgage lender.

You’ll need to meet certain credit and income standards to qualify, though, and the home has to appraise for at least as much as the purchase price.

FHA loans are insured by the FHA. With this government guarantee, lenders limit their losses whenever a borrower defaults on their loan. Borrowers help pay for this guarantee through upfront and monthly mortgage insurance premiums. The guarantee makes FHA loans generally easier to qualify for than conventional loans.

The FHA guarantees several types of loans that serve different purposes, including:

• FHA loan for purchase. A standard FHA purchase loan allows you to buy a primary residence with one to four units.
• FHA streamline refinance. This loan lets you refinance an existing FHA loan without an appraisal and, in some cases, without a review of your income or credit.
• FHA cash-out refinance. An FHA cash-out refinance requires a home appraisal and a review of your credit and income. It works much like a conventional cash-out refinance, allowing you to replace your existing loan with a larger loan and get the difference back as cash.
• FHA 203(k) loan. This home renovation loan lets you borrow money to make home improvements that are expected to boost your home’s value.
• FHA Energy Efficient Mortgage: FHA borrowers can utilize this program to borrow money for energy-efficient home renovations, such as a new furnace or cooling system, insulation for an attic or crawl space, or energy-efficient windows.

One of the benefits of FHA loans is that the interest rates can sometimes be lower than conventional mortgages because, as government-backed loans, lenders view FHA loans as less risky. However, your monthly mortgage payment is more than the interest rate, so always meet with several lenders to compare all associated costs to determine the best deal.

Something else to keep in mind is that FHA loan interest rates can change daily based on market conditions, so it’s a good idea to keep a watchful eye on FHA loan rates to see how they’re trending before you meet with mortgage lenders.

If you are a first-time home buyer, someone with a low credit score or you only have limited funds to put towards a down payment, it may be worth looking into an FHA loan. Here’s a list of requirements to be eligible for an FHA loan:

• Minimum credit score of 500
• At least a 3.5% down payment based on the purchase price (with a minimum credit score of 580)
• Documentation supporting income and employment
• Property standards must meet FHA minimum criteria
• Must have a DTI ratio of 43% or less
• Must pay mortgage insurance premiums (upfront fee and annual premium)
• Property must be borrower’s primary residence
• No recent bankruptcies, foreclosures or similar negative financial events

FHA loan limits are determined on an annual basis and typically rise to keep in step with home price appreciation. They’re calculated at 65% of the Federal Housing Finance Agency’s new conforming loan limits, which are the limits for Freddie Mac- and Fannie Mae-backed loans.

As of January 1, 2023, the new FHA loan limit for the calendar year for single-family homes in most U.S. counties rose from $420,680 to $472,030—a more than 12% increase. Borrowers in higher-cost areas can borrow at a higher figure, known as the “ceiling” limit. The new ceiling limit for the calendar year is $1,089,300. Alaska and Hawaii have their own designated loan limit, which is now $1,633,950.

The benefit of higher FHA loan limits is that borrowers have more flexibility to consider a wider range of potential homes. It’s worth noting that not all borrowers will be eligible for the cap. The size of a loan will depend on other key criteria such as credit score, DTI and down payment size.

Here are the main advantages and disadvantages of FHA loans that you should be aware of if you’re considering this type of mortgage.

Pros

• Minimum down payment is just 3.5%. This is much lower than the traditional 20% down payment, though some conventional loans allow just 3% down.
• Low credit score requirement. An FHA loan may be attainable with a credit score below 620. FHA guidelines allow scores as low as 500 with 10% down and as low as 580 with 3.5% down. However, individual lenders may set tighter guidelines.
• Can be refinanced without requalifying. The non-credit-qualifying FHA streamline refinance loan could help you lower your monthly payment with reduced closing costs and limited documentation. Few other loans offer this benefit, which can be especially helpful if you want to refinance when your home has decreased in value or you’ve lost your job.
• DTI can go as high as 50%. Your DTI ratio can be as high as 50%, according to FHA guidelines, if you have a higher credit score or cash reserves. This is another standard that lenders can decide to tighten, however.

Cons

• Must pay monthly mortgage insurance premiums. If you put down less than 10% on an FHA loan, you’ll have to pay monthly mortgage insurance premiums for the life of the loan. You can drop the private mortgage insurance on a low-down-payment conventional loan once your equity reaches 80%, in many cases.
• Upfront mortgage insurance premium isn’t cheap. Along with monthly mortgage insurance premiums, FHA borrowers must pay an upfront premium of 1.75% of the loan amount. This premium can be rolled into the loan and financed or paid in cash at closing.
• Lower loan limits than conventional conforming loans. The single-family home loan limit for a conventional conforming mortgage in 2023 is $726,200. For an FHA mortgage, it’s $472,030 in most areas. (Limits for both loan types increase in places with a higher cost of living.)
• Only available for primary residences. You can’t get an FHA loan to buy a second home or an investment property.

Applying for an FHA loan is as much about advance planning as it is about the process of applying itself. Let’s take a look at what you can do before you apply to set yourself up for success and what to expect during the application process:

• Determine your budget. Look at your financial situation and decide realistically how much you can afford to borrow.
• Review your credit score. Though FHA loans are more flexible with regard to credit scores compared to conventional loans, a stronger credit score typically puts you in a better position for lower interest rates. So, take steps where you can to improve your credit score, such as paying down existing debt.
• Assemble key documents. When applying for an FHA loan, you will need to provide a number of documents, such as tax returns and W-2s from the past two years, recent bank and investment account statements and your Social Security card.
• Shop for an FHA-approved lender. Don’t go with the first FHA lender you meet. Each lender will offer different rates and some may have more lenient policies or offer lower closing costs and fees. So take the time to compare lenders—at least three—to save yourself money. To find an FHA-approved lender, use the U.S. Department of Housing and Urban Development’s lender list.
• Select lenders and submit applications. This is where all the documents you saved in advance come in and how lenders determine if you meet eligibility criteria.
• Compare loan estimates and fees for the best deal. Lenders are required to provide loan estimates with estimated interest rates and APRs within three business days of your application submission. When comparing loan estimates between lenders, make sure you’re comparing apples to apples—so the same loan type, term and amount.
• Underwriting phase. Once you move forward, an underwriter will review your loan. They will examine all of your documents and your financial health, determine your DTI and confirm your employment and income.
• Home appraisal. The lender will schedule an appraisal to determine the market value of the home.
• Schedule a home inspection. Though not required, you should schedule a home inspection as well once you receive the purchase agreement to make sure there are no surprise issues with the property. If you uncover problems, you can ask the seller to resolve them before you close.

If you are well-organized and there are no delays, you can generally expect the FHA loan process to take between 30 to 45 days from application to closing.

FHA loans make it easier for certain buyers to qualify for home financing thanks to the program’s flexible credit and down payment minimums. However, there some alternatives require no down payment and can potentially offer more competitive rates and fees.

FHA vs. Conventional Loan

FHA loans are generally easier to qualify for than conventional loans as they have lower credit score requirements and more lenient DTI limits. FHA interest rates also tend to be lower.

On the other hand, conventional loans don’t require mortgage insurance if you can put down at least 20%, giving you a lower monthly payment. They’re also viewed more favorably by sellers, so you’re more likely to have your offer accepted when using one versus an FHA loan.

FHA vs. USDA Loan

USDA loans don’t require any money down to buy or build a home in an eligible rural area. Additionally, this program’s upfront and annual guarantee fees are lower than FHA mortgage insurance premiums.

To qualify, you must have a low to moderate income that doesn’t exceed 115% of the median household income. Another potential hindrance is that USDA mortgage lenders typically require a minimum 640 credit score.

FHA vs. VA Loan

The primary perks of a VA loan include no down payment and no ongoing mortgage insurance premiums. Instead, you’ll pay a one-time VA loan funding fee plus other costs at closing.

While the VA doesn’t set a minimum credit score, most VA mortgage lenders require a score between 580 and 620—similar to FHA mortgage lenders.

Forbes Advisor reviewed 12 mortgage lenders that do business both online and in-person throughout the United States. The lenders we reviewed represent some of the largest mortgage lenders by volume, which include banks, credit unions and online lenders.

Our scoring methodology included capturing more than 10 data points, which covered interest rates, lender fees, loan types, discounts, accessibility and borrower requirements.

The best lenders for FHA borrowers excelled in areas that are historically important for this group including low- to average-credit score requirements, low lender fees and low interest rates.

The following is the weighting assigned to each category:

• Loan costs. 30%
• Speed. 20%
• Credit requirements. 20%
• Loan types offered. 20%
• Access and availability. 10%

Specific characteristics taken into consideration within each category include APR, average interest rate, origination fees, minimum credit score requirements, discounts and customer service availability.

We also offered bonus points up to 5% of the score when a lender considers alternative credit data.

Forbes Advisor Senior Staff Writer Natalie Campisi contributed to this article.