FHA loans provide opportunities for homeownership to buyers by lowering some of the thresholds to qualify for a mortgage. Here’s a look at FHA mortgage rates today and how this loan option can benefit potential homebuyers.

What is an FHA loan?

FHA loans, or Federal Housing Administration loans, are government-insured mortgages that provide a path to homeownership for prospective buyers who meet the criteria to qualify for this type of home loan.

If you’re looking to apply for a mortgage but don’t have the credit or savings for a typical financing plan, FHA loans might be right for you.

Since these loans are government insured, lenders can be certain their investment is safe and insured, allowing them to be more flexible towards certain credit or property characteristics when approving a loan. If the buyer can’t keep up payments and the home loan falls into default, the lender can foreclose the property and sell it back on the market to recoup any losses. By insuring a portion of the lender’s financing, banks can be more flexible with their mortgage approval terms, creating new paths to homeownership for borrowers who apply for an FHA loan.

While an FHA loan structure trims down some conventional mortgage obstacles, this type of financing does come with some added expenses that every applicant should be aware of.

FHA mortgage insurance

Your lender will take on additional risk when they approve your FHA loan and will need to compensate for that uncertainty by requiring mortgage insurance.

FHA mortgage insurance protects the lender’s loan amount if you default on your loan. Just like private mortgage insurance on a conventional loan, this policy is paid by the borrower, but only extends coverage to the lending organization's investment in the property. In the event of default or foreclosure, the mortgage insurance company would reimburse the lender for their losses.

On a conventional 30-year fixed mortgage , lenders will usually attach a private mortgage insurance requirement if the buyer can’t make a down payment of at least 20%. Minimum down payments on an FHA loan can be even smaller, making FHA mortgage insurance a built-in necessity for this financing structure.

FHA mortgage insurance usually includes one upfront payment of 1.75% of the principal loan. This first expense is typically paid as an upfront premium included in the mortgage’s closing costs, if the buyer has the cash on hand. This premium can also be financed as part of the loan amount. In addition to this one time installment, FHA borrowers will also have insurance premiums folded into their monthly mortgage payments, amounting from 0.45% to 1.05% of the home loan, according to Investopedia .

Who gets FHA loans?

As a popular option for first-time homebuyers, FHA loans can ease some of the barriers associated with securing a mortgage.

Since these loans are backed by the U.S. government, lenders can be more comfortable financing a home loan for a borrower who would otherwise present too much risk for a mortgage.

For example, a credit score below 620 would typically disqualify a borrower from conventional mortgage approval. With an FHA loan, as long as the borrower can demonstrate gainful employment and afford the required down payment, they could be a much more likely lending candidate.

FHA mortgage rates recently

Just like every other sector of the economy, the real estate market and FHA mortgage rates have seen drastic changes. In the wake of COVID-19, FHA rates saw a significant dip in fixed mortgage rates, but during 2022 as mortgage rates started to increase due to several market conditions, FHA mortgage rates also experienced a rise.

Though rates have seen an increase from the low pandemic rate period, it is still a good time to buy, and an FHA loan is still a powerful option.

According to FreddieMac , national average mortgage rates on a 30-year fixed loan were as high as 4.46% in 2019. By January 2021, those same loans could be secured at an average rate of 2.74%, before ticking up slightly to 2.81% in the next month.

With rates reaching historic lows, more and more Americans are reevaluating their living situation and deciding if now is the time to secure a home loan.

FHA mortgage requirements

To receive an FHA mortgage, you’ll need to demonstrate that you’re an applicable candidate that can reliably repay the debt. Since these loans are government insured, there are several thresholds hopeful borrowers will still need to meet before they begin the homebuying process:

How FHA mortgage rates compare to conventional mortgage rates

This mortgage structure may have more flexible terms for financing approval, but FHA mortgage rates are typically the same as a conventional mortgage. Much like some of the more popular conventional mortgages, FHA loan rates are fixed, meaning the agreed-upon interest rate at the close of the sale will remain unchanged throughout the loan’s amortization schedule.

This certainty allows FHA loan borrowers to understand exactly how much they’ll need to contribute for their mortgage payments for up to three decades, eliminating any worry of unexpected hikes in the cost of repaying money.

Even though FHA mortgage rates don’t differ much from conventional mortgages, qualified borrowers for FHA loans may have different financial backgrounds and their interest rate can be altered as a result.

In addition to economic forces and recent market trends, your specific FHA mortgage rate will depend on other factors, such as your current savings, history of managing debts and mortgage insurance requirements.

On a conventional mortgage, such as a 15-year fixed loan , lenders might have different expectations of their borrowers. Anyone applying for this type of home financing would have to contribute 20% of the home’s sales price for a down payment to avoid PMI requirements, in addition to a strong credit score and financial background. If you can’t meet these standards, your insurance rates could increase as a result.

Just like conventional mortgages, your credit background will still factor heavily on what your lender considers an appropriate FHA mortgage rate.

Credit score requirements

Most lenders will require a minimum credit score of 620 to approve a conventional mortgage. FHA loans, alternatively, could be issued to borrowers with a lower score.

While FHA loans do have lower credit thresholds for prospective borrowers, a higher credit score will still lead to a more favorable purchasing agreement. A lower credit score, on the other hand, will increase the rate of interest on your mortgage.

Lower down payment

As housing prices continue to rise, borrowers paying off their student debt or auto loans might not have the financial bandwidth for a conventional mortgage. One of the biggest hurdles in securing a mortgage is saving enough money for a sizable down payment, which is why many hopeful borrowers apply for FHA loans.

FHA loan applicants with a low credit score will face different FHA down payment requirements. Lower down payment requirements are another advantage of FHA loans, but the amount you could save depends on the quality of your credit score.

FHA loan applicants with a credit score of 620 or higher could qualify for down payment options starting at 3.5%. Any lower than that, in the 500-610 range, usually means the borrower could qualify for down payment options starting at 10%, according to Investopedia .

In addition to FHA mortgage rates, the amount you will pay for the down payment is heavily impacted by your credit score. Borrowers who are able to contribute more towards their FHA loan down payment typically get a lower interest rate as a result.

FHA loan benefits

FHA loans offer a number of benefits. Let’s take a closer look at some of the advantages this loan structure brings to the table:

Minimum down payment options starting at 3.5% for qualified buyers

For those with credit scores of 620 and above, the minimum down payment options for an FHA loan start at 3.5%. For those with credit scores below 620, minimum down payment options start at 10%.

Easier to qualify

FHA requirements are, typically, less strict than typical loans. Although a credit score below 620 does not allow you to take advantage of the lower down payment options starting at 3.5%, conventional lenders require a minimum credit score of 620 or higher.

Seller assistance with up to 6% of closing costs

FHA home loans allow the seller to pay up to 6% of the closing costs, including any costs of the appraisal, property title search or a credit report.

203k renovation loans with a minimum 620 FICO score

If you need extra cash to repair or renovate your home, FHA offers 203(k) loans that offer you loans based not on the current appraised value of the home, but the projected value after these renovations would take place.

The extra money you receive from the loan can then go towards these renovations. This can be used to cover painting, roofing, plumbing, heating and air-conditioning and full room remodels. This is generally only eligible for those with a credit score of 620, which is more along the lines of a minimum credit score for a conventional loan.

Loan limits adjusted annually

FHA home loans have a maximum loan amount (or “ceiling”) that is regularly adjusted every year and vary according to the cost of living in a given area. In 2025, the ceiling for FHA home loans is $1,008,300.

This annual adjustment allows you to wait for the perfect time to apply for an FHA home loan, but loan limits are driven by the average sales price of that area.

FHA loan drawbacks

Every home financing arrangement comes with a few disadvantages. Let’s take a look at some of the limitations you might face when applying for an FHA mortgage:

Paying more for mortgage insurance

FHA mortgage insurance premiums are expensive, and add to an already hefty monthly payment. Not only is this coverage expensive, but taking out an FHA loan with a minimum down payment will keep mortgage insurance on your bill through the loan’s full term.

If you aren’t able to afford the cost of monthly mortgage insurance on top of your existing bills, then saving for a higher down payment might be a better option.

FHA loan limits

Every year, the FHA puts limits on the amount that can be financed through FHA loans. This could greatly restrict your buying options, especially if you’re looking at a high cost area.

FHA loan types

FHA loans are typically made on a 30-year fixed rate amortization plan, but can also be purchased on a 15 year plan. Unlike some other mortgages options, the interest rate on FHA loans won’t be altered throughout the repayment process.

Here’s a look at some other available mortgage structures and how they might suit your home purchasing needs:

FHA loans vs. USDA loans

Much like FHA loans, USDA loans are designed to make it easier for low -income families to achieve their real estate goals. Backed by the U.S. Department of Agriculture, USDA loans also provide lenders with the assurance that their security in the property is protected and can issue loans on more lenient terms as a result.

However, while both mortgage programs have similar goals in mind, USDA loans are geared towards rural communities and can only be administered if the property’s location meets the USDA guidelines.

In addition, USDA loans include strict limits on income levels depending on the location of the home and will come with higher credit score and debt-to-income standards than for FHA mortgages.

FHA loans vs. VA loans

VA mortgages are another home financing assistance program, but are only available to military members and their families. Depending on your military background and home buying goals, VA loans and their advantages might be a preferable option.

OriginPoint mortgages

FHA mortgage could provide the financing solutions you’ll need to buy a new home. Be sure to meet with multiple lenders for a better idea of your purchasing power before you apply for a mortgage .