BEST OF
10 Best Lenders for FHA Loans in March 2021
FHA loans in 2021 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.
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.
» MORE: Compare FHA mortgage rates
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.
» MORE: Compare FHA mortgage rates
Summary of Best Lenders for FHA Loans in March 2021
| Lender | NerdWallet Rating | Minimum Credit Score | Minimum Down Payment | Learn More |
|---|---|---|---|---|
Best for online experience | 580 | 3.5% | at Quicken Loans | |
Best for lower credit score borrowers | 600 | 3.5% | at AmeriSave | |
Best for online FHA loan experience | 580 | 3.5% | at PennyMac | |
Best for nontraditional credit histories | 500 | 3.5% | Read review | |
Best for veterans seeking FHA loans | 580 | 3.5% | Read review | |
Best for overall FHA loan experience | N/A | 3.5% | Read review | |
Best for overall FHA loan experience | 580 | 3.5% | Read review | |
Best for FHA 203k renovation loans | 580 | 3.5% | Read review | |
Best for lower credit score borrowers | 580 | 3.5% | Read review | |
Best for veterans seeking FHA loans | 500 | 3.5% | Read review |
at Quicken Loans
at Quicken Loans
Min. Credit Score
580
Min. Down Payment
3.5%
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 many working Americans.
- Offers custom fixed-rate loan terms that are between eight and 30 years.
- Provides a wide variety of loan types, including renovation loans and all government-backed mortgage products.
Cons
- Quicken Loans doesn't offer home equity loans or HELOCs.
- Quicken's lender fees can be stout and they don't offset those fees with particularly low mortgage rates.
at AmeriSave
at AmeriSave
Min. Credit Score
600
Min. Down Payment
3.5%
Pros
- A good variety of loan types and products.
- A mobile-friendly application process.
Cons
- An average loan origination fee that's higher than the national median.
- Doesn’t offer home equity loans, home equity lines of credit or home improvement loans.
at PennyMac
at PennyMac
Min. Credit Score
580
Min. Down Payment
3.5%
Pros
- Offers a full range of online capabilities, including e-signatures and online loan process tracking.
- Displays custom rate quotes based on home value, down payment or equity, ZIP code and credit score range.
Cons
- Origination fees are higher than the median for all lenders.
- Doesn't currently offer jumbo mortgages or home equity lines of credit.
Min. Credit Score
500
Min. Down Payment
3.5%
Pros
- Offers multiple low-down-payment loan programs.
- May consider alternative credit data, like bank statements and rent payments.
Cons
- To get sample rates, you'll have to speak with a loan officer.
- Doesn't offer home equity loans or HELOC.
Min. Credit Score
580
Min. Down Payment
3.5%
Pros
- Offers extensive educational resources for military borrowers.
- Provides digital tools for a streamlined application process.
- Participates in some state down payment assistance and first-time home buyer programs.
Cons
- No mortgage rates displayed online.
- Doesn’t offer home equity loans or lines of credit.
Min. Down Payment
3.5%
National / Regional
Regional
Pros
- Offers an ITIN qualification path for undocumented borrowers.
- Has a digital application process.
- Offers several mortgage options for low- to moderate-income borrowers.
- Borrowers can qualify with income from self-employment and other nontraditional sources.
Cons
- No mortgage rates published online.
- No home equity loans or lines of credit.
- Generally has higher rates and fees than other lenders.
- Branch offices not available in all states.
Min. Credit Score
580
Min. Down Payment
3.5%
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.
Min. Credit Score
580
Min. Down Payment
3.5%
Pros
- Offers conventional and government-backed loans with low-down-payment options, including FHA 203k renovation loans.
- Has a mobile app to help streamline the application process.
- Has a loan program for medical doctors and dentists with down payments as low as 5%.
Cons
- Doesn’t display information online about rates and fees.
- Doesn't offer home equity loans or HELOCs.
Min. Credit Score
580
Min. Down Payment
3.5%
Pros
- Once your loan is in process, offers a robust digital experience.
- Will consider alternative credit data for FHA borrowers.
Cons
- Doesn’t offer an online application.
- Requires a call or email for personalized rates.
Min. Credit Score
500
Min. Down Payment
3.5%
Pros
- Offers conventional, FHA, VA, USDA and jumbo loans.
- Multiple customer service options, including brick-and-mortar branches and online appointment setting.
Cons
- No mortgage rates displayed online.
- Does not offer home equity loans or lines of credit.
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.
» MORE: FHA vs. conventional loans
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.
» MORE: Debt-to-income ratio calculator
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, 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:
FHA mortgage insurance lasts the life of the loan if your down payment is less than 10%
Property must meet FHA standards
FHA appraisal required
More from NerdWallet
Last updated on March 1, 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 March 2021
- Quicken Loans: Best for online experience
- AmeriSave: Best for lower credit score borrowers
- PennyMac: Best for online FHA loan experience
- Carrington: Best for nontraditional credit histories
- Caliber: Best for veterans seeking FHA loans
- Alterra: Best for overall FHA loan experience
- PrimeLending: Best for overall FHA loan experience
- Stearns Lending: Best for FHA 203k renovation loans
- Mr. Cooper: Best for lower credit score borrowers
- Freedom Mortgage: Best for veterans seeking FHA loans
