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10 Best Lenders for FHA Loans in May 2021

FHA loans offer several benefits including low rates and low down payments. Compare some of the best FHA lenders to find the right fit for your needs.

Kate WoodMay 4, 2021
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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.

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.

Due to the coronavirus pandemic, getting a mortgage may be a bit of a challenge. Lenders are dealing with high loan demand and staffing issues that may slow down the process. Also, some lenders have increased their fees, adjusted their minimum required credit scores or temporarily suspended certain loan products. 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 pandemic, see NerdWallet’s financial guide to COVID-19.

Qualifying for an FHA loan

To qualify for an FHA loan, you'll need a credit score of at least 500 with a 10% down payment. To determine if you’re eligible for the lowest FHA down payment — just 3.5% — 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 just one reason it's worth comparing several lenders.

Are FHA loans only for first-time home buyers?

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 fiscal year 2020, about 83% of FHA purchase loans were made to first-time home buyers — which means 17% went to borrowers who were already homeowners.

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

Yes, you can get an FHA loan 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.

More from NerdWallet

Last updated on May 4, 2021

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 May 2021

Frequently asked questions