In a Nutshell
You don't need a large down payment or perfect credit to get an FHA home loan. Because they're federally insured, FHA loans are generally easier to qualify for compared to conventional mortgages. We rounded up our picks of the best FHA lenders with features such as low fees, the ability to prequalify, access to financial aid and other tools to help homebuyers.FHA loans are mortgages with low down payment and flexible credit requirements that are insured by the federal government.
They’re popular among first-time home buyers and house hunters with less-than-perfect credit since you don’t need a large down payment and they’re typically easier to qualify for compared to conventional mortgages.
We’ve rounded up our top picks of the best FHA lenders to help you decide if any may be right for you.
- Best for renovations: New American Funding
- Best for home buyer resources: Rocket Mortgage
- Best for access to grants: Bank of America
- Best for low fees: Better Mortgage
- Best for bad credit: Carrington Mortgage
- Best for refinancing: CrossCountry Mortgage
- Best for new construction: Movement Mortgage
- How to apply for an FHA loan
- What credit score do I need for an FHA loan?
- Is it hard to qualify for an FHA loan?
- Our methodology: How we picked these home loans
Best home loan for renovations: New American Funding
Why New American Funding stands out: New American Funding offers FHA 203(k) loans, which allow borrowers to roll certain home improvement expenses into their mortgage. The lender also has a five-year rate protection pledge that allows you to refinance your home loan without paying lender or appraisal fees — if you refinance within five years of your original loan closing.
New American offers loan terms of 15 or 30 years, and you can check your estimated rate with no impact to your credit scores before submitting a formal loan application.
New American Funding home loans at a glance
| Availability | Nationwide |
| Credit requirements | Not disclosed |
| Notable feature | 14-business day close guarantee, except in certain instances, including for FHA 203(k) loans |
Read more about New American Funding mortgage loans.
Best for home buyer tools: Rocket Mortgage
Why Rocket Mortgage stands out: Rocket Mortgage offers a number of resources to help house hunters simplify the homebuying process. You can search home listings, get a housing market report for the area where you want to buy and get a property report for your house — if you have one to sell.
When you buy your home with Rocket Homes and Rocket Mortgage, you could save up to $10,000 on closing costs with a 1.5% closing credit.
Rocket Mortgage at a glance
| Availability | Nationwide |
| Credit requirements | 580 for FHA loans |
| Notable feature | Offers $2,000 in closing cost credits when you partner with a Better real estate agent to buy a home. |
Read more about Rocket Mortgage loans.
Best for homebuyer assistance: Bank of America
Why Bank of America stands out: Bank of America has two programs that help defray the cost of purchasing a home. Its America’s Home Grant® program provides lender credits of up to $7,500 for certain closing costs or to buy down your interest rate.
Its Down Payment Grant program provides grants of up to 3% (up to $10,000) of a home’s purchase price in eligible areas. The bank also has a Down Payment Center that can help you find other aid programs you may be eligible for.
Bank of America mortgages at a glance
| Availability | Nationwide |
| Credit requirements | Not disclosed |
| Notable feature | The bank’s Preferred Rewards members may qualify for an origination fee or interest rate reduction |
Read more about Bank of America mortgage loans.
Best for low fees: Better mortgage
Why Better mortgage stands out: When you get a home loan from Better mortgage, the company won’t charge commission fees. The lender offers a Better price guarantee, promising to beat any competitor’s offer by $100 or give you $100 if certain conditions are met.
Better mortgage at a glance
| Availability | Nationwide |
| Credit requirements | 580 for FHA loans |
| Notable feature | Offers $2,000 in closing cost credits when you partner with a Better real estate agent to buy a home. |
Read more about Better Mortgage loans.
Best for bad credit: Carrington Mortgage
Why Carrington Mortgage stands out: Carrington Mortgage accepts applications from people with credit scores as low as 500 for purchase FHA loans and FHA refinance loans, including FHA streamline refinances. You can apply for a mortgage online or by phone.
Carrington Mortgage at a glance
| Availability | Nationwide |
| Credit requirements | Minimum 500 for FHA loans |
| Notable feature | Mobile app allows you to manage your mortgage |
Read more about Carrington Mortgage loans.
Best for refinancing: CrossCountry Mortgage
Why CrossCountry Mortgage stands out: CrossCountry Mortgage offers multiple FHA refinancing options, including standard FHA, FHA Streamline, FHA cash-out and FHA 203(k) refinancing. You can complete your application online. The lender’s FastTrack Credit Approval program can help you in a competitive market. The program can review your financial information to see if you’re preapproved for a home loan and provide you a letter to include with your offer.
CrossCountry Mortgage at a glance
| Availability | Nationwide |
| Credit requirements | Not disclosed |
| Notable feature | May be able to refinance in as few as 21 days with a streamlined loan review process |
Read more about Cross Country Mortgage loans.
Best for new construction: Movement Mortgage
Why Movement Mortgage stands out: Movement Mortgage offers FHA construction loans, allowing you to build the home of your dreams. The lender offers an extended rate lock — up to 360 days — so you can lock in your rate while you wait. If your application is approved, you’ll receive a fully underwritten preapproval, usually within six hours.
Movement Mortgage at a glance
| Availability | Nationwide |
| Credit requirements | 620 for FHA loans |
| Notable feature | Most loans are processed within seven business days or less |
Read more about Movement Mortgage loans.
How to apply for an FHA home loan
Not all lenders offer FHA loans. After you’ve found one that does, here’s what you need to know.
FHA loan requirements
You must meet the following requirements to qualify for an FHA loan.
- Down payment. You need a down payment of at least 3.5%, but you may need as much as 10%, depending on your credit scores.
- Credit scores. Your credit scores must be at least 500 if you have a 10% down payment or 580 with a 3.5% down payment, according to FHA guidelines. However, lenders may set higher minimum credit score requirements.
- Housing type. The property you buy must have one to four units and be your primary residence.
- Debt-to-income ratio. You typically need a debt-to-income, or DTI, ratio of 43% or lower, but you may qualify with a higher DTI if you meet certain requirements.
FHA loan pros
- Low down payment requirements. You may be able to put as little as 3.5% down.
- Less stringent credit requirements. In general, it’s easier to qualify for an FHA loan than a conventional or jumbo loan.
- Down payment assistance. You can use gift funds from friends or relatives, or aid from local and state agencies for your down payment.
- Potential closing cost help. Sellers may pay for up to 6% of the buyer’s closing costs.
FHA loan cons
- You may pay more. If you have good credit and can put at least 10% down, FHA loans typically cost more than conventional loans.
- Mortgage insurance can add up. If you put less than 20% down, you have to pay a one-time fee for mortgage insurance, which is usually equal to 1.75% of the home price. You’ll also have to pay monthly mortgage insurance premiums.
- You may not be able to borrow as much as you want. The Department of Housing and Urban Development (HUD) sets limits on FHA loans based on housing type, state and county where the property is located.
- There are limits to the type of property you can buy. You can only use an FHA loan to finance the purchase of a one- to four-unit primary residence.
What credit score do I need for an FHA loan?
You may qualify for an FHA loan with credit scores as low as 500 if you have a down payment of at least 10%. With a down payment of 3.5%, you need credit scores of at least 580.
Is it hard to qualify for an FHA loan?
In general, it’s easier to qualify for an FHA loan than a conventional loan or jumbo loan because it has less stringent credit requirements. You may also want to consider a VA or USDA loan if you’re eligible. VA loans don’t require mortgage insurance, and you may not need to put any money down. However, you typically need to pay a funding fee at closing. USDA loans don’t require a down payment, but you may have to pay mortgage insurance and a one-time funding fee.
Our methodology: How we picked these home loans
We reviewed more than a dozen FHA lenders to come up with our top picks, taking into account factors such as fees, closing timelines, application process, loan types, assistance programs and other features that may be helpful to home buyers.