From Yahoo Finance: 2024-05-31 12:47:00

FHA loans are a crucial part of first-time home ownership in the US, offering lower credit score requirements and down payments. Yahoo Finance has narrowed down the best FHA lenders in the country, with PNC Bank earning top honors for mortgage rate transparency and overall ratings.

Chase Bank stands out for its on-time closing guarantee and abundance of learning resources for FHA borrowers. U.S. Bank offers a below-market mortgage rate for eligible borrowers in the first year, along with a user-friendly online application process.

Pennymac, the largest FHA lender in the nation, offers unique benefits like a $2,000 credit for refinancing closing costs and a 20-year FHA mortgage option. However, the lender’s interest rates were below average in 2024.

Flagstar Bank offers an FHA Adjustable Rate loan, providing a lower fixed rate for up to 10 years. While the lender has higher-than-median interest rates, it also offers a wide range of loan calculators.

FHA loans have low credit score requirements and competitive rates, making them a popular choice for homebuyers. However, they come with FHA mortgage insurance premiums paid by the borrower throughout the life of the loan.

To qualify for an FHA loan, borrowers need a credit score of at least 500 with a 10% down payment or 580 with 3.5% down. Lenders may have additional eligibility requirements, so it’s important to shop around for the best offer.

While FHA loans have their benefits, they may not be the best fit for everyone. Borrowers with higher credit scores may qualify for conventional loans with lower down payment options.

For military service-connected borrowers, VA loans are often a better option than FHA loans, as they require no down payment or mortgage insurance, and have limits on closing costs.

USDA home loans are not just for rural properties; some suburban areas also qualify. FHA loan amounts are based on property values, while USDA loans are capped by household income.

When choosing an FHA lender, consider factors like interest rates, loan costs, and online features. Comparison shopping is crucial to find the best deal for your home purchase.

Read more: Best FHA lenders of May 2025