FHA loan rates

An FHA loan is a kind of mortgage used for financing a home. The Federal Housing Administration (FHA) is part of the U.S. Department of Housing and Urban Development, also known as HUD. The FHA insures loans made by FHA-approved lenders, like Rocket Mortgage.

The FHA was created in 1934 to make it easier for people to become homeowners, and today FHA loans are still doing that because they have less stringent requirements than conventional loans.

Here’s a look at how two other popular loans we offer for buying a home, conventional and VA, compare to FHA loans:

Down payment: FHA loans used to have one of the lowest down payments (3.5%), but now Rocket Mortgage has loans with down payments as low as 1%. And if you’re eligible for a VA loan, you could need no down payment at all.

Credit: You can have credit as low as 580 to qualify for an FHA or a VA loan. For conventional, we require 620 or better. You can also have less credit history, or not so perfect credit compared to conventional.

Mortgage insurance: FHA loans require mortgage insurance paid upfront when you get your loan and paid monthly with your mortgage payment. Conventional loans require monthly mortgage insurance if your down payment is less than 20%. VA loans also require an upfront fee similar to mortgage insurance, but no monthly mortgage insurance.

Inspections: You can expect an appraisal of the home you’re buying for all three loan types. FHA and VA loans have a few more requirements to make sure the home is safe and in good condition.

You should get the mortgage that’s right for your situation. That may be an FHA loan if your details mean you don’t qualify for other loans. For example, an FHA loan may be your best option if your credit is under 620. If you’re thinking about buying a home within the next few months, the best way to discover your options is to get prequalified and talk to a Home Loan Expert.

Rocket Mortgage offers a few different kinds of FHA loans for buying a home. You can get an FHA loan with a fixed interest rate and a term (loan length) of 15, 20, 25 or 30 years.

If the home you’re financing is over certain loan limits, we offer FHA jumbo loans.

We also offer FHA loans with an adjustable interest rate. This FHA loan has a fixed rate for the first 5 years, then can change every year after.

You can even get an FHA jumbo ARM! You don’t need to figure out which one is best for your situation, though. We’ll help find what’s right for you.

At Rocket Mortgage, these are the general guidelines for getting an FHA loan:

• 580 or better credit

• At least a 3.5% down payment (you can use down payment assistance to help with that)

• Money for closing costs: roughly 3-6% of the home price

• Less than half of pre-tax income going to pay debt

• Steady employment history

If your details are close to these numbers and you want to buy a home soon, getting prequalified is a great way to understand your options.

Compared to the most popular home loan, the 30-year fixed conventional, FHA loans do typically have lower interest rates. That’s because they’re insured by the Federal Housing Administration, so they’re less risky for lenders.