Current FHA Mortgage Rates and Lenders
Review current FHA mortgage rates for October 19, 2018. Use the table below to compare multiple FHA lenders in your area. The table shows FHA mortgage rates next to conventional loans so you can see the difference in interest rates and closing costs. FHA mortgage rates are usually lower than conventional loan rates but the closing costs are higher because you pay an upfront mortgage insurance premium (MIP), which is included in the fees and APR shown in the table. Change the options in the refine your search menu to view FHA mortgage rates and monthly payments based on your individual loan amount. We advise you to contact at least five lenders to find the FHA loan with the lowest rate and fees.
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Why Select an FHA Mortgage
Low Down Payment.
The main benefit of the FHA mortgage program is that it enables borrowers to buy a home with a down payment as low as 3.5% of the property purchase price. This compares to 10% - 20% down payment required to buy a home with most conventional mortgage programs. Borrowers can also combine the FHA program with a down payment assistance program or closing cost grant to further reduce the personal financial contribution they are required to make to buy a home. The FHA program charges borrowers additional up-front and ongoing fees but makes home ownership more attainable, especially for low-to-moderate income borrowers. The low down payment requirement also makes the FHA program an attractive financing option for first-time buyers.
Low Interest Rate.
FHA mortgage rates are typically .125% - .500% lower than the current interest rate on a conventional loan or low down payment mortgage program. This is because FHA loans are backed by the federal government plus borrowers are required to pay an ongoing FHA Mortgage Insurance Premium (MIP) which is similar to private mortgage insurance and protects the lender against default or foreclosure. The FHA MIP is an extra ongoing cost for borrowers but the insurance enables lenders to offer lower rates on FHA loans. Borrowers should consider both the interest rate and FHA MIP when evaluating the total cost of the loan.
Flexible Borrower Qualification Requirements.
The borrower qualification requirements for the FHA mortgage program are more flexible than for other low or no down payment mortgage programs. For example, the program typically requires that borrowers have a minimum credit score of only 580 and there are cases where a borrower can obtain an FHA mortgage with a lower score. Additionally, lenders have more discretion when applying debt-to-income ratios to determine what size mortgage borrowers can afford. The higher the debt-to-income ratio, the larger the mortgage the borrower can afford.
Available to All Borrowers.
The FHA mortgage program is available to all borrowers that qualify. There are no borrower income limits although there are limits on loan amounts available through the program. Additionally, the program applies to all eligible properties, up to four units in size, as long as the borrower occupies the property.
Mortgage Rates by Loan Product
Mortgage Rate ReportFriday, October 19, 2018
Mortgage rates moved higher this week as stock market volatility pushed bond yields higher. When the stock market drops, bond yields typically increase which applies upward pressure on mortgage rates, which we saw this week. Ironically, investor concerns over rising interests rates is one of the main factors that led to the equity market sell-off. Rates continue to increase following the Federal Reserve's decision to increase the Federal Funds rate 0.250% to a target range of 2.000% to 2.250% at its September meeting.
The rate hike was the Fed's third of the year as it implements a more aggressive monetary policy in response to a strong economy and labor market. The Fed also reinforced its plan to raise interest rates at least one more time before the end of 2018 and removed language that described its policy as "accommodative" from the meeting statement. The Fed's September meeting statement highlighted strong economic growth including a robust jobs market, household spending, business investment and inflation that is approaching targeted levels. These factors outweigh economic concerns previously identified by the Fed including the impact of a trade tariffs, sluggish wage growth and a slowdown in the housing market.
In implementing its interest rate strategy, it is clear that the Fed is more focused on a robust labor market and accelerating inflation than stalling home sales and prices. Supporting the Fed's outlook, the unemployment rate recently fell to its lowest level an almost five decades despite lower than expected job creation.
Although the housing market continues to be battered by a lack of affordable inventory, higher mortgage rates and a pullback in home construction -- all of which the Fed has acknowledged in recent comments -- the overall direction of the economy is offering no reason for the Fed to change its course on rates. The Fed's actions and consistently bullish signaling pushed mortgage rates to an eight-year high this week.
The interest rate for a 30 year fixed rate mortgage increased 0.125% to 4.750% and the rate for a 15 year fixed rate mortgage moved 0.125% higher to 4.250%. The interest rate on a 5/1 adjustable rate mortgage (ARM) also jumped 0.125% to 4.250%. Jumbo mortgage rates inched up 0.125% to 4.750%, inline with conforming loans. After climbing over much of the past month non-owner occupied mortgage rates reached the key 5.000% level. Providing some relief for borrowers, FHA mortgage rates and VA mortgage rates both remained steady at 4.250%, with both programs appealing to borrowers focused on low or no down payment programs, especially first-time home buyers.
The Fed had clearly communicated its plan to raise rates at its September meeting so few were surprised by the decision as well as the subsequent uptick in mortgage rates. Most signs -- including perhaps most important, the Fed's actions and words -- point to higher rates in the future, although borrowers should expect fluctuations in the near term. While interest rates are impossible to predict, prospective borrowers looking to buy a home or refinance should take advantage of any market pullbacks and may be able to lock in a lower rate by acting sooner rather than later. As lenders react differently to dynamic market conditions, we have also seen much wider variation in mortgage rate pricing, which means borrowers benefit more by shopping multiple lenders.
Because rates change constantly, we continue to actively monitor the mortgage market for new developments. Borrowers should check the FREEandCLEAR rate tables regularly to review personalized, updated mortgage rates for lenders in their area. Our rate tables are free to use and require no personal information.
Why Borrowers Compare FHA Mortgage Rates on FREEandCLEAR
Comparing FHA mortgage rates can save you thousands. Use our rate tables to find the lender offering the lowest rates and fees
Our rate tables put you in control. You can compare lenders anonymously plus you never need to provide your social security number
Review FHA mortgage rates from leading lenders. Our lenders offer highly competitive terms to win your mortgage business
More FREEandCLEAR Mortgage Resources
Use our FHA Mortgage Qualification Calculator to determine what size FHA loan you can afford as well as the required up-front and ongoing FHA Mortgage Insurance Premium
Review our comprehensive overview of the FHA Mortgage Program including borrower eligibility requirements
We provide a thorough summary of multiple mortgage programs that enable borrowers to buy a home with little or no down payment
Ask the FREEandCLEAR Mortgage Expert about the FHA mortgage program or any mortgage topic and receive an insightful response within 24 hours