FHA Loan Interest Rates

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Homebuyers with cashflow concerns, lower credit scores, limited credit history, or bankruptcies⁠ — plus homeowners with an existing FHA or conventional loan on their primary residence with lower home equity may qualify for an FHA loan⁠. Each FHA loan is insured by the Federal Housing Administration with easier qualification standards compared to a conventional loan. FHA loan interest rates are based on several factors outlined ahead.

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Features vs. Conventional

  • Lower down payment requirements
  • Lower interest rates (but mind APR)
  • Lower debt-to-income (DTI) reqs
  • Lower credit score reqs¹
  • Mortgage insurance (MIP) reqs²

Topics Below

I. Eligibility Requirements
II. Key Factors | Interest Rates
III. Our Approach
V. For More Info

I. Eligibility Requirements³

Provided for informational purposes only and subject to change. These are minimum eligibility requirements as set by FHA and Strong Home Mortgage eligibility requirements may differ. Contact a loan officer to discuss your eligibility.

  • Debt-to-Income (DTI) ratio of 43% or under
  • 3.5% down payment with minimum credit score of at least 580¹
  • 10% down payment with credit score between 500 and 579¹
  • Borrower(s) must occupy the home as the primary residence
  • Borrower(s) must have proof of employment with steady income

Concerned about qualifying with your credit score? Let’s schedule a call.

II. Key Factors | Interest Rates

FHA loan interest rates are set by the lender and follow Federal Reserve benchmarks. Some factors that may affect rates include:

  • Loan Purpose (cash-out, purchase, etc)
  • Loan Duration (e.g. 30 year vs 15 year)
  • Credit Score
  • Previous Loan Repayment History
  • Current Market Conditions

III. Our Approach

FHA loan interest rates, like other mortgage aspects, have many moving parts. Each borrower is unique. Your loan officer becomes your single point-of-contact to ensure clear, timely, and tailored communication. We often close loans in less than 30 days, beating the gold standard for well-qualified customers. We answer questions, promote understanding, clear hurdles, and hustle to deliver your loan sooner.


Below are answers to commonly-asked questions, including topics on FHA loan interest rates.

Are FHA Loan interest rates lower?
FHA loan interest rates can be more competitive than conventional mortgages but will vary depending upon the “Key Factors” listed above. Be sure to compare APR (annual percentage rate), which reflects the interest rate as well as other costs of the loan including FHA’s Mortgage Insurance Premium (MIP). The Federal Housing Administration insures all FHA mortgage loans and guarantees the FHA-approved lender in the event of default, which reduces risk to the lender when issuing the loan. The FHA promises a portion of the loan will be repaid to the FHA-approved lender, should the borrower go into default.
What’s the difference between FHA loan interest rates and APR?

An interest rate is what you pay each year to borrow money. It doesn’t reflect any fees incurred. The annual percentage rate (APR) on a loan, reflects a broader borrowing cost, including the interest rate plus any fees associated with obtaining the mortgage.

How volatile are FHA loan interest rates?

Rates can potentially change daily depending on current market conditions.

Are refinance and purchase the same regarding FHA loan interest rates?
No. The purpose of the FHA loan, your credit, the loan-to-value ratio, and other factors affect FHA loan interest rates. Please review the complete interest rates table above.
How does mortgage insurance work with an FHA loan?

Most FHA mortgage loans require the payment of a mandatory Upfront Mortgage Insurance Premium (UFMIP) as well as an annual mortgage insurance premium (MIP), which covers the risk of default on your loan. The one-time 1.75% UFMIP is non-recoverable except on an FHA Streamline Refinance. The loan amount, LTV, and loan term affect your annual MIP premium (which is often collected in monthly installments and is also referred to as the periodic or monthly MIP).

If you put down at least 10% as a down payment when you purchase a home, then your annual MIP expires after 11 years. Otherwise, you may have to refinance an FHA loan with a conventional loan to stop paying an annual MIP.

What’s an FHA Streamline Refinance?
An FHA Streamline is a special program for those borrowers who already have an FHA loan on their home. It provides a quick and easy way for FHA-insured homeowners to obtain lower FHA loan interest rates (depending on market conditions). In addition, you may be eligible for a refund up to 68% of the upfront mortgage insurance premium on the new refinance loan.
What sources can be used for a down payment on an FHA loan?

Only FHA-approved fund sources may be used as a down payment on FHA loans. These sources include funds from your investments, bank accounts, and gift funds. First-time homebuyers may also qualify to withdraw up to $10,000 from an IRA account penalty-free.

Can gift funds be used for down payment on an FHA loan?

Yes. Gift funds may be used to help first-time home buyers meet the 3.5% down payment requirement. However, under the FHA loan guidelines, proper documentation is required to ensure the funds are acquired from one of the following FHA-approved sources:


  • A family member of the borrower
  • An employer or labor union of the borrower
  • A close friend with a clearly defined and documented interest in the borrower
  • A charitable organization
  • A governmental agency or public entity with a program providing homeownership assistance to low or moderate income families or first-time homebuyers
What are property requirements for an FHA loan?

Here are some of the property requirements for a home purchase or refinance which must be met to obtain an FHA loan:

  • The home must be used as the borrower’s primary residence
  • Appraisal must be completed by an FHA-approved appraiser
  • The property does not have any physical or structural deficiencies affecting the safety and security of the occupants
Can you pay points on an FHA mortgage to lower your rate?

Yes. You may pay upfront points to obtain an even lower FHA loan interest rates for the life of the loan. This may be a great option for those who are planning to stay in their home for a longer period. Generally, for each point paid, you’ll receive a ¼ point reduction in your rate.

What’s the FHA definition of a first-time homebuyer?

It may be surprising that FHA’s definition of a “first-time” home buyer may include those who have already owned a home in the past. In fact, FHA considers anyone who has had no ownership in a principal residence within the last three years a “first-time” homebuyer. In other cases, a single parent that once owned a home with a previous spouse or anyone who previously owned a mobile home may also qualify as a first-time homebuyer without satisfying the three-year lookback period. 

IV. For More Info

For a more complete detail of requirements, please read the FAQs above or visit https://fha.gov.

Ready to explore your FHA loan options?

By using this website, you agree to these Terms of Use.  All content provided is for informational purposes only and subject to change.  Contact a loan officer to discuss your personal situation.  Strong Home Mortgage does not offer goods or services to residents located in New York, Georgia, Nevada, or Missouri.

¹Strong Home Mortgage currently offers FHA loans to borrowers with a credit score of 600 or higher.
²FHA collects a one-time upfront mortgage insurance premium (UPMIP) and an annual mortgage insurance premium, also referred to as the periodic or monthly MIP, which is collected in monthly installments.
³Additional requirements apply. Eligibility subject to final underwriting approval. This is not a commitment to lend.

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