The 9 best FHA mortgage lenders for 2021

Peter Warden
The Mortgage Reports editor

Compare top FHA lenders

FHA loans are popular thanks to their lenient guidelines. Home buyers can qualify with a credit score of just 580 and 3.5% down.

And it’s easy to find FHA financing; the majority of lenders are FHA-approved. But that doesn’t mean you should go with just any FHA lender.

As with other loan types, FHA loan rates and requirements can vary a lot from one company to the next. So you’ll want to compare a few different FHA-approved lenders to find your best deal.

Check your FHA loan rates (Jul 27th, 2021)
FHA Lender Min. Credit Score Requirement Best Features*
Homepoint Financial 580 Lowest average rates and fees
Freedom Mortgage 600 Low average rates
CMG Financial 600 Low average rates, top-rated service
New American Funding 580 Average rates, top-rated service
Finance Of America 600 Average rates 
Fairway Independent 580 Top-rated service, low credit allowed
CrossCountry 580 Low credit allowed
PrimeLending 580 Low credit allowed
U.S. Bank Not Listed Lower average loan costs

*Average rate and fee analysis based on self-reported data lenders are required to file under the Home Mortgage Disclosure Act. Actual rates and fees will vary by customer

Check your FHA loan rates (Jul 27th, 2021)

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The 9 best FHA lenders for 2021

FHA loans are known for having easier requirements than other mortgages. But that’s not the case with every lender.

For instance, some FHA-approved lenders allow credit scores as low as 500 (with a 10% down payment) while others set their minimum credit score at 620 or even higher.

Similarly, some lenders offer lower mortgage rates than others.

That means it’s important to shop around for an FHA loan — doubly so if you have bad credit or another issue that makes it harder to qualify.

So check with the lenders on this list. But also consider local banks and credit unions that might take a more hands-on approach if you’re having trouble qualifying.

Verify your FHA loan eligibility (Jul 27th, 2021)

1. Homepoint Financial

How is Homepoint listed as our No. 1 FHA lender when it was founded only in 2015? Mainly because, in 2019, it had the lowest average FHA mortgage rates of any lender on our list — and the third-lowest loan costs.

But it’s also a good all-rounder, scoring respectably for customer complaints and online reviews. Here are some other things you need to know:

  • Licensed to make FHA loans in all 50 states
  • Good online application and follow-through processes after initial telephone contact
  • Has a mobile app for homeowners
  • Has an A- Better Business Bureau (BBB) rating
  • Very few physical branches

Some customers have reported minor snags in the application process, and difficulty in resolving issues.

But, if you want to pay the least you can for your FHA loan, you’ll want Homepoint on your shortlist.

2. Freedom Mortgage

Freedom Mortgage rates for FHA loans are nearly as low as Homepoint’s. So they’re the second-lowest on our list. However, its average closing costs on these loans were midrange in 2019.

Freedom was also the biggest FHA lender on our list in 2019, originating 129,000 FHA loans.

Inside Mortgage Finance named it the biggest FHA lender in America for the first three quarters of 2020.

That comes with pros and cons. Freedom Mortgage has unrivaled experience in creating FHA mortgages. But it also gets more customer complaints filed with the Consumer Financial Protection Bureau (even allowing for volume) than our other top lenders, except U.S. Bank.

Still, there are lots of positives, most importantly:

  • Very low mortgage rates on average
  • Choice of how to engage: online, by phone, or through a limited branch network
  • Operates in all 50 states
  • Considers “nontraditional credit histories,” meaning it will look at on-time payments for rent and utilities if you have a thin credit file
  • Happy to work with down payment assistance programs
  • Has a B+ BBB rating

All in all, Freedom Mortgage is another very strong contender for your short list.

Check Freedom Mortgage rates today, July 27, 2021

3. CMG Financial

CMG Financial had the third-lowest average FHA rates in our survey. And it scored better than our top two for online reviews and customer complaints to the CFPB.

However, its average FHA loan fees were higher than most on our list. That means more expensive closing costs.

Other considerations include:

  • Has an A+ BBB rating
  • Licensed in most but not all states
  • Handy app lets you monitor and advance your FHA loan application
  • Named one of 2020 HousingWire Tech Trendsetters

Overall CMG Financial offers an attractive combination of low rates and superior customer care.

4. New American Funding 

New American Funding says it views mortgage applications on a case-by-case basis.

In other words, it doesn’t just tick boxes, but is willing to look deeper into the reasons why your application may be borderline.

This approach could be helpful to many wanting an FHA loan — especially those with past red marks on their credit report.

You also need to know:

  • New American Funding operates in 48 states, but not New York or Hawaii
  • Has an A+ BBB rating
  • Excellent technology with the option of a wholly digital experience
  • More than 200 branches in 34 states for those who prefer face-to-face encounters
  • Few complaints to the Consumer Financial Protection Bureau
  • Second-best for online reviews

The main downside is higher-than-average loan costs. But for many borrowers that could be a price worth paying.

Check New American Funding mortgage rates today, July 27, 2021

5. Finance Of America 

Finance of America offers competitive FHA loan rates, falling right at the average among our 9 best FHA lenders. But its loan costs were just the tiniest bit higher than New American Funding.

However, with Finance of America, you can likely expect a more personal experience. That’s because you’ll be working one-on-one with an adviser throughout the process, often by phone and email.

Here are the basics:

  • Finance of America operates in all 50 states
  • Has an A+ BBB rating
  • Has 400+ local adviser branches
  • Very few customer complaints to the CFPB

Finance of America seems to offer good value for your money, and a great choice for those who want person-to-person service.

6. Fairway Independent Mortgage

Fairway Independent Mortgage Co. is the lowest in our survey for average FHA loan costs. But its rates are competitive rather than ultra-low.

Fairway also has the fewest customer complaints filed with the CFPB and the second-highest score for online customer reviews. So it clearly deserves its spot as one of the best FHA lenders this year.

Here are some other considerations:

  • 500+ branches, well spread across 48 states (operates in all 50 states)
  • Slick technologies that let you finish your application within 10 minutes and do the whole process online if you wish
  • Has an A+ BBB rating

We like Fairway’s excellent customer service and reckon it’s a shoo-in for most short lists.

7. CrossCountry Mortgage

If speed is important to you, CrossCountry may be your best choice. This company reckons it’s able to close most loans in 21 days.

However, a more complicated underwriting process can often slow loan approval. So if you have issues in your credit history or another problem that needs to be explained, you should expect your loan approval to take longer than advertised.

CrossCountry also encourages strong personal relationships between borrowers and loan officers. So you’ll have someone to help you through the loan process.

  • Operates in all 50 states with physical branches in 37
  • Has an A+ BBB rating
  • Good scores from online customer reviews. And a small number of complaints to the federal regulator
  • You need to speak to a loan officer before you can get a quote

All in all this is another excellent lender worth checking out for your FHA loan.

Check CrossCountry mortgage rates today, July 27, 2021

8. PrimeLending

PrimeLending won the No. 2 spot in our review of the 8 best mortgage lenders for first-time homebuyers. We liked that it works well with state and local down payment assistance programs.

PrimeLending also has its own form of assistance: the NeighborhoodEdge® Closing Cost Assistance program, which offers those purchasing in low- or moderate-income neighborhoods up to $2,000.

If you qualify for this aid, you may not mind PrimeLending’s slightly higher-than-average mortgage rates. Especially as its loan costs are below average for our nine lenders.

Other key information includes:

  • PrimeLending operates in all 50 states
  • Has an A+ BBB rating
  • Good for those who like to work online, but also offers plenty of human support
  • E-closing (online closing) option

There’s an awful lot to like about PrimeLending. And, especially if you’re in line for that $2,000 help toward closing costs, it may well be your first choice.

9. U.S. Bank

U.S. Bank is by far the biggest (and the most long-established) organization on our list. You probably either love or hate big banks. But either way, give this one a chance.

U.S. Bank has the second-lowest loan costs on our list. As importantly, it was a top-5 lender on the J.D. Power 2020 U.S. Primary Mortgage Origination Satisfaction Study, which is a real achievement.

Aside from that, U.S. Bank:

  • Operates in all 50 states
  • Has a 3,000+ branch network for those who prefer face-to-face encounters
  • Offers good self-service online technologies
  • Has an A+ BBB rating

If you’re already a U.S. bank customer, you get the added benefit of keeping all your finances under one roof.

Check your FHA loan rates today (Jul 27th, 2021)

FHA home loan requirements 

Thanks to their backing from the Federal Housing Administration, FHA loans are typically easier to get approved for than other loan types — especially if your credit history isn’t as strong as you’d like.

To qualify for one of these loans, most FHA-approved lenders require:

  • A minimum credit score of 580. Some may approve you with a 500-579 FICO score, but only providing you have a 10% down payment. These are easier credit requirements than most other mortgages
  • A low down payment of at least 3.5% if your credit score is 580 or higher
  • Maximum debt-to-income ratio (DTI) of 50%. This means your new mortgage payments, combined with ongoing debts like credit cards, auto loans, and student loans, can’t exceed half of your monthly income before tax. Check out Simple mortgage definitions: Debt-to-Income (DTI) for more information
  • Solid employment history showing a reliable income that’s likely to continue for at least 3 years after the loan closes
  • A relatively clean credit history that’s free of foreclosures going back three years

In addition, you must be purchasing a home you plan to live in as your primary residence. That’s often a single-family home, though the Federal Housing Administration will also insure 2-, 3-, and 4-unit properties as long as the owner lives in one of the units full-time.

Finally, the property you’re buying or refinancing must be within current FHA loan limits.

In most places, FHA’s maximum loan amount is $356,362 for a single-family home. But multifamily loan limits can be as high as $685,400 for a 4-unit property.

If you want to buy in an area where average home prices are high, FHA’s loan limits may be higher, too

Verify your FHA loan eligibility (Jul 27th, 2021)

FHA mortgage rates 

If you look at interest rates alone, FHA loans are very competitive. They often have similar or even lower interest rates compared to conventional loans, which are ones not backed by the federal government.

But interest rates aren’t the only consideration. Because FHA loans also require you to pay for mortgage insurance. This takes the form of:

  1. An upfront mortgage insurance premium equal to 1.75% of the loan amount, which most borrowers include on their loan balance
  2. An annual mortgage insurance premium equal to 0.85% of the loan amount, which is paid in 12 monthly installments

The annual mortgage insurance rate of 0.85% is effectively an increase on your mortgage rate. It increases your APR — annual percentage rate — which accounts for loan fees as well as interest.

For example, if current FHA rates are at 2.75%, your ‘effective rate’ with mortgage insurance included might be closer to 3.6%.

Can I get rid of FHA mortgage insurance?

With an FHA loan, you usually have to keep paying for mortgage insurance premium (MIP) until you either sell the home or refinance.

The only exception is for FHA borrowers who make a down payment of 10% or more. In this case, MIP payments last 11 years.

Understandably, many borrowers with FHA loans hate mortgage insurance. But they live with it because they know they typically make way more from rising home prices than they pay in premiums.

In this way, mortgage insurance actually offers a great return on investment.

Pros and cons of FHA financing 

Pros of FHA loans

The biggest advantages of the FHA loan program are its lenient credit guidelines and low down payment requirement.

You may be approved for a home purchase loan even if you have a:

  • Low FICO credit score (580+)
  • Low down payment (3.5%)
  • High existing debts and monthly financial commitments (DTI of up to 50%)

If these are big factors for you, an FHA loan may be the only way to realize your homeownership dreams. That’s why they’re so popular among first-time homebuyers.

Cons of FHA loans

FHA loans really have only one major drawback. And that’s the cost of the mortgage insurance we mentioned earlier.

You have to make sure you can comfortably afford all your homeownership costs before you sign for one of these loans. But you can see them as a stepping stone.

Many home buyers expect to refinance out of an FHA loan and into a conventional mortgage with no PMI and lower payments later on.

That’s usually easy to do once your equity reaches 20% of your home’s value.

How to choose your best FHA lenders

There’s nothing magical about comparison shopping for a mortgage. It’s the same exercise you do when you want to buy a new car, TV, or washer. (But you can save way more when you shop for a home loan.)

First, research reputable lenders who are known for their bargains. You have a head start with 9 great FHA lenders identifed on this list.

Next, get a customized Loan Estimate from at least 3-5 of your preferred lenders. Choose the one with the lowest ‘price,’ which in this case means the most competitive FHA loan rate and closing costs for your situation.

Many borrowers can save thousands of dollars by shopping around for their mortgages. So it’s worth investing some time to find your best deal.

At the very least, get Loan Estimates from three lenders. But you increase your chances of making savings with every additional one.

Verify your new rate (Jul 27th, 2021)