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Best FHA lenders of January 2025
If it weren't for loans backed by the Federal Housing Administration (FHA), it's likely that thousands upon thousands of people wouldn't have been able to afford to buy their first home. Over the past 90 years, FHA-insured mortgages have enabled lenders to accommodate underserved households.
Yahoo Finance has researched lenders offering FHA loans, examined the federal records of lending practices — including interest rates, loan costs, and affordability factors — and has determined the best FHA lenders worthy of your consideration.
Learn more: How to use an FHA 203(k) loan to renovate a home
Best FHA lenders of January 2025
Best FHA lender overall
Pennymac
The Yahoo view: In a Yahoo Finance analysis, Pennymac garnered a 5-star rating in the mortgage rate category for its low median interest rates when compared to its competitors. Online features were also impressive.
Stars: 3.80
Read our full Pennymac mortgage review
Key benefits
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Use a Pennymac-affiliated real estate agent and get from $350 to $9,500 cash after closing.
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If rates go down after you close a home loan with Pennymac, get a $2,000 credit toward closing costs when you refinance within three years.
Need to know
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Advertised FHA mortgage rates require a credit score of 680 — higher than the FICO 580 that the FHA requires.
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Pennymac had a well-below-average rating for customer satisfaction, according to the 2024 J.D. Power Mortgage Origination Satisfaction Study.
Read more: How to get the lowest mortgage rates possible
Best bank for FHA lending
U.S. Bank mortgage
The Yahoo view: There can be many reasons to choose a bank for an FHA loan: a current financial relationship with the bank, customer discounts, and convenience. U.S. Bank is our choice for the best bank for FHA lending — especially if you already have a relationship with the company.
Stars: 3.80
Read our full U.S. Bank mortgage review
Key benefits:
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Existing U.S. Bank customers may earn up to $1,000 in closing costs credits.
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U.S. Bank has made a five-year financial commitment to offer down payment assistance and lender fee credits to underserved families.
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Earns Yahoo Finance's highest rating of five stars for useful online features.
Need to know:
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Published sample mortgage rates have high credit hurdles. Advertised interest rates may be beyond many borrowers' eligibility.
Dig deeper: Down payment assistance — How it works and how to qualify
Best FHA lender for face-to-face service
Rate (Guaranteed Rate)
The Yahoo view: A network of local offices gives borrowers an in-person option that builds on the strength of Rate's impressive online capabilities.
Stars: 3.80
Read our full Rate (Guaranteed Rate) mortgage review
Key benefits:
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With 600 local branches nationwide, Rate gives you the opportunity to deal with a live person rather than getting a loan strictly online.
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Offered a lower-than-median interest rate to borrowers in 2023, according to Yahoo Finance's analysis of HMDA data.
Need to know:
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Sample FHA mortgage rates are based on a 680 FICO score. Borrowers may qualify with a lower credit score, but your rate will likely be higher.
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Customer satisfaction was well below average, according to J.D. Power's Satisfaction Study.
Learn more: The credit score needed to buy a house
Best FHA lender for refinancing
AmeriHome Mortgage
The Yahoo view: AmeriHome dedicates more than 20% of its business to FHA loans, and an FHA Streamline Refinance offers a quicker decision and less paperwork.
Stars: 3.60
Read our full AmeriHome Mortgage review
Key benefits
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AmeriHome offers homeowners FHA refinance loans with no origination charge.
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For borrowers without a credit history, AmeriHome considers alternative credit data, such as bank statements.
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A temporary interest rate discount, called a buydown, can reduce your mortgage rate by up to 3%.
Need to know
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AmeriHome doesn't lend to Hawaii, Massachusetts, or New York residents.
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With no physical branches, you'll need to apply online or by phone.
Learn more: Want to refinance your FHA loan? Here are 4 loan options.
Best FHA lender for home-buying benefits
loanDepot
The Yahoo view: loanDepot wants to be your full-service solution for buying a home, so it offers cash incentives for buyers using affiliated real estate agents.
Stars: 3.40
Read our full loanDepot review
Key benefits:
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loanDepot teams up with selected local real estate agents to offer buyers cash bonuses at closing.
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Refinance with loanDepot, and after 12 months, subsequent refis are free of lender fees.
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Claims to close loans 50% faster than the industry average.
Need to know:
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Mortgage rate estimates are unavailable online. You'll have to contact a loan representative for a quote.
Dig deeper: When it makes sense to refinance your mortgage
Best FHA lender for educational resources
New American Funding
The Yahoo view: New American Funding receives 5 stars in Yahoo Finance's affordability category because of its broad selection of loans. However, mortgage rate transparency is lacking.
Stars: 3.20
Read our full New American Funding review
Key benefits
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New American Funding has an “FHA Loan Details by State” page where you can select your state and see the rules and benefits for FHA mortgages where you live.
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The FHA page has a lot of educational content on FHA loan requirements, types of FHA loans, pros of each FHA loan term length, and more.
Need to know
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Mortgage rates shown on New American Funding’s website seem pleasantly low, but they can be reduced with three discount points and as much as a 40% down payment, which is only revealed when clicking through to advertising disclosures on a separate page.
Learn more: How FHA-approved condos work
Best FHA lender for down payment assistance
Cardinal Financial
The Yahoo view: Cardinal Financial is a top-20 retail loan volume FHA lender that can help you find eligible government-loan down payment assistance programs.
Stars: 3.20
Read our full Cardinal Financial mortgage review
Key benefits:
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Cardinal Financial works with borrowers to find FHA-eligible down payment assistance programs.
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Considers credit scores for FHA loans as low as 580.
Need to know:
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Charged much-higher-than-median loan costs for mortgages originated in 2023, according to Yahoo Finance's analysis of HMDA data.
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Doesn't show sample mortgage rates on its website.
Best FHA lender for online applications
Rocket Mortgage
The Yahoo view: Rocket Mortgage has the highest retail volume of FHA loans nationally and scored better than average in customer satisfaction. Unfortunately, Yahoo Finance found loan costs to be high with little rate transparency.
Stars: 3.06
Read our full Rocket Mortgage review
Key benefits
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Rocket Mortgage provides up to a $7,500 grant toward the down payment and closing costs for eligible first-time home buyers in 21 U.S. metro areas.
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Home buyers who purchase a home through its partner company Rocket Homes can earn a closing costs credit of 1.25%, up to $10,000 on a loan financed by Rocket Mortgage.
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Rocket Mortgage offers FHA loans for manufactured homes. Specifically, it offers Title II loans, which cover both the manufactured house and the land it sits on.
Need to know
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Rocket Mortgage scored above average in customer satisfaction among home loan lenders, according to the latest J.D. Power Mortgage Origination Satisfaction Study.
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Rocket earned high marks in satisfaction for mortgage servicing — the collection of loan payments from borrowers and dispersing the funds to third parties.
Read more: How FHA loans for manufactured homes work
Best FHA lender for customer satisfaction
Fairway Independent Mortgage Corporation
The Yahoo View: Fairway Independent Mortgage is a seasoned FHA lender offering branch locations in 48 states and Washington, D.C. Fairway also had an above-average customer satisfaction rating among mortgage originators in 2024, according to J.D. Power.
Stars: 2.70
Read our full Fairway Independent Mortgage Corporation Mortgage review
Key benefits
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If you prefer working face-to-face with a lender, Fairway has branch locations nationwide.
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You can apply online, in person, or by phone.
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Fairway offers first-time home buyer grants, which can be applied to closing costs or your down payment.
Need to know
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Fairway had an above-average score for pleasing customers in the 2024 J.D. Power Mortgage Origination Satisfaction Study.
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Fairway doesn't publish sample mortgage rates. You'll have to complete an application or call for a rate quote.
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In Oct. 2024, the Consumer Financial Protection Bureau and the Department of Justice accused Fairway Independent Mortgage of illegal mortgage lending discrimination against majority-Black neighborhoods in the Birmingham, Ala., area. A proposed settlement orders a $1.9 penalty against Fairway and requires the company to provide $7 million for a loan subsidy program and an additional $1 million for outreach and education.
Learn more: How an FHA cash-out refinance works
How do FHA loans work?
FHA loans work like most mortgages do. They are underwritten by private FHA-approved lenders, so you apply with loan officers from the mortgage providers you choose, compare loan offers, and submit a final application for approval.
Lenders structure the loans to meet FHA standards so that the government can insure the mortgage. That protects lenders from exposure to defaults, allowing them to make more loans and secure their working capital.
FHA loans are subject to FHA mortgage insurance premiums (MIPs) paid for by the borrower, which we will cover more later.
Tips for comparing FHA lenders
Look for lenders that offer the best combination of low interest rates and minimal fees, with personnel who are helpful, respectful, and show they want your business by clearly guiding you through the loan process.
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Use a mortgage calculator to determine how much of a monthly payment you can afford.
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Check your credit report and credit score so that you know your creditworthiness. You’ll need a minimum credit score of 580 to qualify for an FHA loan with a 3.5% down payment. Many credit card companies and financial institutions offer free credit score access.
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Consider various mortgage loan types to find out which one is best for you. FHA loans are great options, but you might find an even better fit.
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Determine how much down payment you can make. You only need 3.5% down for an FHA loan, but if you put down 10%, you can qualify with a 500 credit score and automatically remove FHA mortgage insurance after 11 years.
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Shop multiple lenders and compare loan offers. Pay close attention to the annual percentage rate you are offered.
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Select your best offer and get an official mortgage preapproval.
FHA loan closing costs
The Department of Housing and Urban Development (HUD) estimates that FHA loan closing costs usually equal around 3% to 4% of the home sales price. For a $500,000 house, that would come to $15,000 to $20,000.
Many of the closing costs are the same as those for a conventional loan, such as an appraisal fee, inspection fee, and charges for a title search and title insurance. The main difference is the FHA mortgage insurance premium (MIP).
Dig deeper: FHA loan closing costs — What they cover and how much you'll pay
FHA mortgage insurance
FHA loans require mortgage insurance regardless of how much you put down. FHA mortgage insurance premiums (MIPs) have two parts:
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An up-front mortgage insurance premium (UFMIP) is due on closing day.
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An ongoing annual MIP is paid in monthly installments with your mortgage payment.
The UFMIP payment is set at 1.75% of the mortgage loan amount. Your ongoing MIP cost depends on a various factors, including the mortgage principal, loan-to-value ratio, and loan term length.
You can remove FHA mortgage insurance after 11 years if you made a down payment of 10% or more when you bought the home.
Learn more: How FHA mortgage insurance works
Pros and cons of FHA loans
Pros
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Low down payment: If you have a 580 credit score, you only need a 3.5% down payment to get an FHA loan. Some conforming loans require 5% or more, and you'll probably need 10% to 20% down for a jumbo loan.
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Low credit score requirement: You only need a 500 credit score to qualify for an FHA loan if you have a 10% down payment. Otherwise, you're eligible with a 580 score and 3.5% down payment.
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Higher debt-to-income ratio (DTI): Typically, mortgage lenders approve you for an FHA loan with a 43% DTI ratio. Many conventional loans cap your DTI at 41%. However, both FHA and conventional loan lenders may offer flexibility, so it's important to shop for lenders and loan types.
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Competitive mortgage rates: FHA loans usually have lower interest rates than conventional mortgages.
Cons
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Property requirements: The property you're buying must meet the minimum property standards set by the U.S. Department of Housing and Urban Development (HUD), and a home appraiser will check that the home abides by these rules when they visit the house.
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Loan limits: You can't borrow as much with an FHA loan as with a conforming conventional loan. In 2025, the conforming loan limit for a single-unit property is $806,500 in most parts of the U.S, and the FHA loan limit is $524,225.
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Mortgage insurance: Unlike VA and USDA loans, FHA loans require mortgage insurance premiums throughout the life of the loan. It's also not nearly as easy to cancel FHA MIPs as it is with conventional loan private mortgage insurance (PMI).
Dig deeper: Pros and cons of FHA loans
Alternatives to FHA loans
FHA vs. conventional loans
FHA loans are well-suited for borrowers with credit scores as low as 500 to 580. However, if your credit score is 620 or higher, you may qualify for a conventional loan. Two conventional mortgage programs, HomeReady and Home Possible, are also targeted at home buyers with limited savings, offering down payment requirements as low as 3%. That even edges out the FHA minimum down payment of 3.5%.
Some lenders offer the same conventional loan programs but reduce the required down payment to 1%. To find the lenders that offer a 1% down program, check out Yahoo Finance's best lenders for first-time homebuyers.
Dig deeper: FHA vs. conventional loan — Which should you choose?
FHA vs. VA loans
As good as FHA loans are, they really can't compete with loans backed by the Department of Veterans Affairs. For military service-connected borrowers, VA loans are most often your best bet. That's because VA loans usually require no down payment or mortgage insurance, and they put a limit on closing costs.
A VA mortgage is a valuable benefit available to current service members, veterans, and eligible surviving spouses.
Learn more: FHA vs. VA loans
FHA vs. USDA loans
USDA home loans sound like they would be meant exclusively for farm and ranch properties. However, while most qualifying areas are rural, some suburban areas are also included.
FHA loan limits depend on local property values, but mortgages backed by the USDA (U.S. Department of Agriculture) are capped by household income. While FHA loans are governed by county loan limits, USDA loans are meant to help low- to moderate-income households earning no more than 115% of the local median household income.
Read more: FHA vs. USDA loans
FHA lenders that did not make our best FHA lender list
We seriously considered the following mortgage lenders with FHA loans for our best-of list, but they weren’t quite as strong as our top picks:
Best FHA lender FAQs
What is an FHA loan, and who qualifies?
An FHA loan is a government-backed mortgage designed for low- to moderate-income households. With a lower credit score threshold, borrowers may qualify with a credit score of 500 with a 10% down payment or 580 with 3.5% down.
What will disqualify you from an FHA loan?
You may not qualify for an FHA mortgage if your credit score is below 500, you are delinquent on any Federal debt (including student loans) or have a Federal lien on your assets, or you have a debt-to-income ratio (DTI) over 57% (though lenders can set their own maximum DTI). You do not have to be a U.S. citizen to qualify for an FHA loan. Still, you must have lawful permanent resident alien status or be a non-permanent resident alien with a valid Social Security number and eligible to work in the U.S.
Is it hard to get an FHA loan right now?
Let's face it, no home loan is easy to get — but FHA loans are the most flexible when it comes to qualifying. There will be a lot of paperwork, just as with all loans. You will also have to prove that you have a steady income and can make the monthly mortgage payment. The key is to ask questions, understand what you are signing, and prepare for an occasional bump in the road along the way.
Do sellers avoid FHA buyers?
A seller can refuse your offer for any reason, even if it is higher than someone else's offer. One reason sellers might avoid an FHA buyer is that FHA loans often have more stringent appraisal standards. A seller may be required to make repairs to meet those HUD property guidelines. FHA borrowers may also be unlikely to afford large earnest money deposits that entice sellers — and FHA loans have a reputation for taking longer to close.
Who is the largest FHA lender?
Rocket Mortgage is the largest FHA lender by number of FHA loans issued, according to 2023 HMDA data.
Are all FHA lenders the same?
No, not all FHA lenders are the same. It's true that the Federal Housing Administration has a set credit score and down payment that lenders must follow. However, each lender charges different interest rates and fees.
What credit score is good for FHA loans?
You can qualify for an FHA loan with a 500 credit score if you have a 10% down payment or 580 score with 3.5% down.
What bank is best for FHA loans?
The best companies for FHA loans are often mortgage lenders, not necessarily banks. However, you may be able to get a good deal on an FHA loan if you go through the bank you already use. U.S. Bank is our top bank for FHA loans.
Methodology:
Yahoo Finance reviews and scores mortgage lenders with quintile scoring in five primary categories: 1) Interest rates. Using 2023 Home Mortgage Disclosure Act data comprised of 10 million home loan applications, we score mortgage lenders on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and lenders are rated based on total loan costs compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We score lenders based on whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.
Review of Nationwide Multistate Licensing System (NMLS) data on regulatory actions can trigger a penalty to the score of any lender with a consumer mortgage-related administrative or enforcement action within the past five years.
Advertisers or sponsorships do not influence ratings.
Editorial disclosure for mortgages:
The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender's website for the most current information. This site doesn't include all currently available offers.
This article was edited by Laura Grace Tarpley.
