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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.

NerdWalletMarch 1, 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. 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.

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 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.

Summary of Best Lenders for FHA Loans in March 2021

Quicken Loans

at Quicken Loans

4.5

NerdWallet rating 

at Quicken Loans

Min. Credit Score

580

Min. Down Payment

3.5%

Good for: borrowers looking for just about all of the services your neighborhood lender does — with online convenience.

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.
Read full review
AmeriSave

at AmeriSave

4.5

NerdWallet rating 

at AmeriSave

Min. Credit Score

600

Min. Down Payment

3.5%

AmeriSave offers a number of loan products, but a soft credit inquiry is required before you can see customized rates. And its origination fees are on the high side.

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.
Read full review
PennyMac

at PennyMac

4.5

NerdWallet rating 

at PennyMac

Min. Credit Score

580

Min. Down Payment

3.5%

PennyMac excels in online capabilities and makes it easy to shop rates online. Average origination fees are higher than other lenders, and home equity lines of credit and jumbo mortgages were suspended due to the COVID-19 pandemic.

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.
Read full review

Carrington: NMLS#2600

3.0

NerdWallet rating 
Min. Credit Score

500

Min. Down Payment

3.5%

Good for: first-time home buyers or credit-challenged borrowers interested in government loan products.

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.
Read full review

Caliber: NMLS#15622

3.5

NerdWallet rating 
Min. Credit Score

580

Min. Down Payment

3.5%

Good for: first-time home buyers, veterans and those who may have credit challenges to overcome.

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.
Read full review

Alterra: NMLS#133739

3.5

NerdWallet rating 
Min. Down Payment

3.5%

National / Regional

Regional

Good for: first-time home buyers and those with nontraditional incomes.

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.
Read full review

PrimeLending: NMLS#13649

3.5

NerdWallet rating 
Min. Credit Score

580

Min. Down Payment

3.5%

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.
Read full review

Stearns Lending: NMLS#1854

3.5

NerdWallet rating 
Min. Credit Score

580

Min. Down Payment

3.5%

Stearns Lending offers a full menu of purchase and refinancing loans, but no home equity loans or lines of credit. Interest rates aren't posted online.

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.
Read full review

Mr. Cooper: NMLS#2119

3.0

NerdWallet rating 
Min. Credit Score

580

Min. Down Payment

3.5%

Good for: borrowers looking for lower credit score requirements and those who don’t mind fully remote customer service.

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.
Read full review

Freedom Mortgage: NMLS#2767

2.5

NerdWallet rating 
Min. Credit Score

500

Min. Down Payment

3.5%

Freedom offers a typical range of home loan options, but rates are not available on its website.

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.
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, 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 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