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11 Best Lenders for FHA Loans in September 2020

NerdWalletAugust 31, 2020

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FHA loans in 2020 offer several benefits including low rates and low down payments. If you're interested in an FHA loan, we'll help you choose the right lender for you. Compare some of the best FHA lenders across several categories.

NOTE: Due to the coronavirus outbreak, obtaining a mortgage may be a bit of a challenge. Lenders are dealing with demand and staffing issues. If you can’t pay your current home loan, refer to our mortgage assistance resource. For the latest information on how to cope with financial stress during this emergency, see NerdWallet’s financial guide to COVID-19.

You might think all Federal Housing Administration lenders are the same. But even when you’re looking for an FHA loan, it’s always smart to shop at least three lenders. Their mortgage rates, fees and other costs to borrow can vary substantially. Remember, the lender you choose will affect how fast you can close, how much you pay and, ultimately, whether you can buy the home you want.

NerdWallet has picked some of the best FHA lenders in a variety of categories so you can quickly determine which one is right for you.

Summary of Best Lenders for FHA Loans in September 2020

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at New American

New American Funding: NMLS#6606

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Min. Credit Score

640

Min. Down Payment

3%

National / Regional

National

at New American


Why we like it

Ideal for home buyers and refinancers who want an FHA mortgage and need to be evaluated using nontraditional credit criteria.

Pros

  • Uses manual underwriting to evaluate creditworthiness.

  • Offers full online mortgage application, rate quotes, document upload and loan tracking.

  • Home equity lending sets it apart from most non-bank lenders.

Cons

  • Services not available in all 50 states.

Read Full Review
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at Quicken Loans

Quicken Loans: NMLS#3030

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Min. Credit Score

580

Min. Down Payment

3%

at Quicken Loans


Why we like it

Ideal for FHA borrowers who like online convenience. Quicken is the largest FHA lender in the nation and a mortgage-technology leader.

Pros

  • Quicken Loans couples a fully online application with available mortgage advisors for those who want a human touch.

  • Instantly verifies employment and income for more than 60% of working Americans.

  • Offers custom fixed-rate loan terms that are between eight and 30 years.

  • Provides FHA-backed loans, USDA loans as well as products offered by Freddie Mac and Fannie Mae that require down payments as low as 3%.

Cons

  • Quicken Loans doesn't offer home equity loans or HELOCs.

  • If you’re a “look me in the eye” type of customer, you’re out of luck.

  • Doesn’t consider alternative credit data. It just looks at credit scores and debt-to-income ratios, the way most mortgage lenders always have.

Read Full Review
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at Rocket Mortgage

Rocket Mortgage by Quicken Loans: NMLS#3030

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Min. Credit Score

580

Min. Down Payment

3%

at Rocket Mortgage


Why we like it

Ideal for anyone who appreciates smartphone app service, support and time savings. Rocket Mortgage offers a fully digital home loan experience with a large variety of mortgage products.

Pros

  • The site caters to self-service users who want to apply for a home loan without talking to a human unless it’s absolutely necessary.

  • With your authorization, accesses asset statements from 98% of U.S. financial institutions.

  • Tells you the loan amount you’ll qualify for within minutes.

  • Rocket Mortgage’s document and asset retrieval capabilities can save you a bunch of time and hassle.

Cons

  • Doesn't offer home equity loans or HELOCs.

  • If you’re a “look me in the eye” type of customer, you’re out of luck.

  • Doesn’t consider alternative credit data. It just looks at credit scores and debt-to-income ratios, the way most mortgage lenders always have.

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at Veterans United

Veterans United: NMLS#1907

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Min. Credit Score

660

Min. Down Payment

0%

at Veterans United


Why we like it

Ideal for military personnel and their families. FHA mortgages from Navy Federal Credit Union include alternative credit scoring so it's easier for first-time borrowers to obtain a home loan.

Pros

  • Offers 24/7 customer service over the phone.

  • Has online application and pre-qualification.

  • Offers a free credit counseling service.

  • Employs advisors from each branch of the armed forces.

Cons

  • Doesn’t offer home equity loans or HELOCs.

  • Veterans United has physical branch offices in only 18 states.

  • Information on FHA, USDA and conventional loans is harder to find on their website.

  • Charges higher rates and fees than some other lenders.

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at Fairway

Fairway Independent Mortgage: NMLS#2289

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Min. Credit Score

640

Min. Down Payment

3%

at Fairway


Why we like it

Good for borrowers who want access to a wide variety of mortgages and the convenience of a comprehensive mobile application process.

Pros

  • Offers a robust suite of loan products, including a variety of renovation loans.

  • Has a digital application that can be completed in 10 minutes.

  • Works with some state housing finance agencies to offer mortgages with down payment and closing cost assistance.

Cons

  • Mortgage rates aren't posted online.

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Vylla: NMLS#2600

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Min. Credit Score

500

Min. Down Payment

3%


Why we like it

Ideal for first-time home buyers or credit-challenged borrowers who may have trouble qualifying for a mortgage.

Pros

  • Low minimum credit score.

  • Online application, loan tracking and document upload.

  • Free rate locks.

Cons

  • No online preapproval.

  • No presence in Massachusetts or North Dakota.

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PrimeLending: NMLS#13649

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Min. Credit Score

580

Min. Down Payment

3%


Why we like it

Good for: borrowers looking for closing cost assistance, as well as those seeking to renovate or to build a new home.

Pros

  • Full online application includes document uploads and automated loan updates.

  • Offers a "float-down" interest rate lock.

  • Offers a proprietary closing-cost assistance program.

Cons

  • No online mortgage rates — you have to contact the lender for info.

  • Doesn't offer home equity products.

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Guild Mortgage: NMLS#3274

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Min. Credit Score

580

Min. Down Payment

3%


Why we like it

Good for: first-time home buyers and others who may need the flexibility of a low-down-payment loan program.

Pros

  • Offers multiple online conveniences, including a full mortgage application, e-signatures and digital loan process tracking.

  • Offers a wide variety of loan products, including home improvement and manufactured home loans.

Cons

  • Does not offer home equity loan products.

  • Average interest rates and fees are higher than other lenders.

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Citibank: NMLS#412915

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National / Regional

National

Min. Down Payment

3%


Why we like it

Ideal for borrowers with nontraditional credit. FHA mortgages from CitiMortgage feature low down payment options and flexible financial requirements so it's easier for first-time borrowers to obtain a home loan.

Pros

  • Offers a wide variety of loan options, including low-down-payment mortgages and jumbo mortgages.

  • Provides customizable mortgage rates on its website.

  • Offers low rates and fees compared with other lenders.

Cons

  • Charges a mortgage application fee.

  • Requires help from a mortgage loan officer to complete the loan application online.

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Flagstar: NMLS#417490

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Min. Credit Score

580

Min. Down Payment

3%


Why we like it

Ideal for FHA borrowers who appreciate face-to-face service. Flagstar embraces FHA-backed mortgages, well suited for borrowers looking to qualify with rental payments, utility bills and other nontraditional credit sources.

Pros

  • Offers a wide range of loan types and products, including FHA, VA and USDA.

  • Has a full suite of online conveniences.

  • Does well with rate transparency, and monthly payment estimates add mortgage insurance, when applicable.

Cons

  • Doesn’t offer renovation loans at this time.

  • Home equity lending is geographically limited.

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Bank of America: NMLS#399802

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Min. Credit Score

640

Min. Down Payment

3%


Why we like it

Ideal for borrowers who value a traditional bank with high-tech tools. Bank of America's Home Loan Navigator allows you to track the lending process online and upload paperwork digitally.

Pros

  • Allows borrowers to apply entirely online.

  • Offers down payment and closing cost assistance programs.

  • May give existing customers a discount on mortgage lender origination fees.

Cons

  • Does not offer renovation loans.

Read Full Review

FHA loan FAQ

How do you apply for an FHA loan?

Applying for an FHA loan isn't especially different from what you'd do for a conventional mortgage. You don't apply to the Federal Housing Administration itself; you’ll work with a mortgage lender that likely offers other types of loans in addition to FHA loans.

The key difference is that your mortgage will be insured by the FHA. That backing makes lenders more willing to take on borrowers who might have a limited credit history or a down payment composed of gift money, for example.

Who can qualify for an FHA loan?

To qualify for an FHA loan, you'll need a credit score of at least 500 if you're making a 10% down payment. To determine if you’re eligible for the lowest down payment — just 3.5% — FHA underwriters will look for a score of 580 or higher. You’ll also need to have a debt-to-income ratio of 50% or less.

In addition to money for your down payment, you'll also need funds to cover FHA closing costs and an upfront mortgage insurance premium, which for FHA borrowers is 1.75% of the loan amount. Both the upfront insurance premium and the closing costs can be rolled into the total amount of the mortgage.

Bear in mind that these are the FHA's qualification guidelines; individual lenders may impose additional rules. That's another reason why it's worth comparing lenders. For example, if your credit score falls toward the low end of what's accepted or you have a nontraditional credit history, you may want to look to a lender like New American Funding, which offers manual underwriting.

Do you have to be a first-time home buyer for FHA?

No, you do not need to be a first-time home buyer to use an FHA loan. Lower credit score minimums and down payments certainly make FHA loans attractive to first-time home buyers, but current homeowners are eligible, too. In 2019, the most recent fiscal year for which data is available, about 83% of FHA purchase loans were made to first-time home buyers — which means 17% went to borrowers who were already homeowners. If this is your first rodeo, Citibank and Flagstar Bank are noted for being first-timer friendly as well as standout FHA lenders.

Can you get preapproval for an FHA loan?

Yes, you can get FHA loan preapproval. The process is similar to preapproval for other mortgage types, though you'll need to work with an FHA-approved lender. A lender with robust online functionality, like Quicken Loans, can speed the process by electronically accessing necessary info like your credit score, employment history and banking records.

A mortgage preapproval letter shows sellers that you're ready to commit: You've got a lender stating on paper (or digitally) that it is willing to loan you a particular amount of money and spelling out the conditions of the potential loan. Getting preapproved by more than one lender lets you compare not only rates but also all the fees and conditions each lender would apply.

Can you get an FHA loan if you have student loans?

Yes, you can get an FHA loan even if you have student loan debt, though you'll still have to meet FHA debt-to-income requirements. FHA student loan guidelines state that lenders must include all student loans when calculating a borrower's debt-to-income ratio. If your payments are currently deferred, your lender will consider your "monthly obligation" to be 1% of your total student loan balance.

Is an FHA loan a good idea for you?

Here are a few pros and cons to weigh:

Pros:

  • Lower minimum credit score requirements

  • Low down payments

  • 203(k) mortgage options that incorporate renovation costs

Cons:

More from NerdWallet

Last updated on August 31, 2020

Methodology

NerdWallet's star ratings for mortgage lenders are awarded based on our evaluation of the products and services each lender offers to consumers who are actively shopping for the best mortgage. The five key areas we evaluated include the variety of loan types and products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available Home Mortgage Disclosure Act data. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team.

To recap our selections...

NerdWallet's Best Lenders for FHA Loans in September 2020