FHA loans are part of the fabric of first-time home ownership in America. For decades, mortgages backed by the Federal Housing Administration (FHA) have helped thousands of families get into their first home. With less-stringent credit score requirements, lower down payments, and flexible debt-to-income ratios, it’s a stepping stone to generational security.
With the latest government information on home lending, Yahoo Finance narrowed the field of FHA lenders — considering mortgage products and services from a consumer’s perspective. Here are our latest choices for the best FHA lenders in the country.
In this article:
PNC Bank
The Yahoo view: PNC Bank earns top honors as our best FHA lender with high overall ratings among the lenders we’ve reviewed, including 5 stars for mortgage rate transparency.
Read our full PNC Bank mortgage review
Key benefits
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FHA borrowers may qualify for up to a $5,000 grant applied to closing costs.
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A rate calculator on the PNC FHA loans page will give you sample interest rates based on the value of the home you’re looking to buy and your down payment, credit score range, and location. No contact is necessary.
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The lender ranks above average in the latest J.D. Power mortgage originator customer satisfaction survey.
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Chase Bank
The Yahoo view: Chase offers the conveniences of a large national bank: many local offices, an assortment of deposit accounts, and a commitment to an on-time mortgage closing.
Read our full Chase Bank mortgage review
Key benefits
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Chase guarantees an on-time closing in as little as three weeks, or you may be eligible for $5,000. Available to qualified borrowers.
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The lender offers an abundance of learning resources and tools, including a well-reviewed podcast called “Beginner to Buyer.” Chase earns a Yahoo Finance 5-star rating for online features.
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Estimated FHA mortgage rates are location-based. You simply enter your ZIP code.
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Pennymac
The Yahoo view: Pennymac is the largest FHA lender in the nation based on the number of loans issued in 2024. A large portion of those loans were FHA refinances.
Read our full Pennymac mortgage review
Key benefits
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If FHA mortgage rates go down within three years after you close a home loan with Pennymac, you can receive a $2,000 credit toward your refinance closing costs.
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The lender has a 20-year FHA mortgage option — along with the typical 15-year and 30-year options — for both home purchases and refinances.
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Pennymac offers FHA Streamline Refinancing and FHA cash-out refinances.
Need to know
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Pennymac offered below-average interest rates on loans issued in 2024. However, overall loan costs were much higher than average.
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Pennymac has 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
U.S. Bank mortgage
The Yahoo view: U.S. Bank helps ease the pain of elevated interest rates by offering eligible borrowers a below-market mortgage rate during the first year of a home loan.
Read our full U.S. Bank mortgage review
Key benefits:
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Your FHA loan may qualify for a one-year mortgage rate buydown. U.S. Bank will adjust your monthly payment to a lower rate for 12 months, after which your payment will revert to the original loan rate.
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You can apply for an FHA prequalification online. U.S. Bank says it takes about five minutes and won’t impact your credit score.
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U.S. Bank mortgages earn Yahoo Finance’s highest rating of 5 stars for useful online features.
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For most FHA loans, U.S. Bank requires a minimum credit score of 640. The FHA allows, and many banks permit, a minimum FICO score of 580.Best FHA lender for home-buying benefits
Rate (previously Guaranteed Rate)
The Yahoo view: Rate’s impressive online resources and capabilities are supplemented by a suite of related home-buying services, including insurance.
Read our full Rate (Guaranteed Rate) mortgage review
Key benefits:
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Rate provides access to solutions related to home buying, such as an insurance marketplace, title services, and a home search tool.
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Educational resources include courses for first-time home buyers, credit building, and home retention, as well as personal finance workshops.
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 their rate will likely be higher.
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A “Same Day Mortgage,” Rate’s program that approves your application in one day, is not available to FHA borrowers.
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Customer satisfaction is well below average, according to J.D. Power’s Satisfaction Study.
Flagstar Bank
The Yahoo view: Looking for a lower rate on an FHA mortgage? Flagstar has an adjustable-rate mortgage that just might be the solution.
Read our full Flagstar mortgage review
Key benefits
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Most FHA loans have fixed mortgage rates, but Flagstar Bank offers an FHA Adjustable Rate loan that provides a lower fixed rate for up to 10 years. After that initial period, your loan can reset at a higher or lower rate annually.
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A large selection of loan calculators can answer most of the questions you might have.
Need to know
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Yahoo Finance analysis shows Flagstar offered higher-than-median interest rates and loan costs to borrowers in 2024.
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Offices in just nine states, though mortgage loans are available in all 50 states.
Learn more: The different types of FHA loans
FHA loans work like most mortgages do. They are underwritten by private 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.
Look for lenders that offer the best combination of low interest rates and minimal fees. They should also have helpful, respectful personnel who clearly guide you through the loan process and show they want your business.
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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 at least a 580 credit score 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.
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).
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 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.
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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.
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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
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 payments 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?
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
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 amounts 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
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:
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.
You may not qualify for an FHA loan 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.
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.
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.
Pennymac is the largest FHA lender by number of FHA loans issued, according to 2024 HMDA data.
No, not all FHA lenders are the same. It’s true that the Federal Housing Administration has guidelines for the credit score and down payment to qualify for an FHA loan. However, lenders can require higher eligibility standards and charge different interest rates and fees.
You can qualify for an FHA loan with a 500 credit score if you have a 10% down payment, or a 580 score with 3.5% down. However, as mentioned above, lenders may use “overlays” to require higher eligibility standards.
The best lender for an FHA loan for you may be a mortgage lender or a bank. You may be able to get a good deal on an FHA loan if you go through the bank you already use, but comparison shopping is a must. If you are considering a bank, there are several on our recommended lender list for FHA loans.
Methodology:
Yahoo Finance reviews and scores mortgage lenders with quintile scoring in five primary categories: 1) Interest rates. Using 2024 Home Mortgage Disclosure Act data from almost 5,000 mortgage companies, 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.
