Best Lenders for FHA Loans
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June 14, 2018 / Hollie Shuttlewood.
Best Lenders for FHA Loans
June 14, 2018 / Hollie Shuttlewood.
If you have a low credit score or don’t have enough cash to make a 20% down payment on a home, don’t despair: an FHA loan could be just the solution for you and your family to purchase a home.
Top 3 Lenders for FHA Loans

Many of the nation’s top lenders are approved by the Federal Housing Administration to offer FHA loans.

#1
Years of operation: 22 | States: 50 | Annual Closed Mortgage Volume: | NA

Pros
  • + Free service
  • + Compare multiple FHA lenders
  • + Handy educational resources
Cons
  • - Not a direct lender
  • - Rates shown only by entering contact details
  • - Calls from multiple lenders
LendingTree is an online marketplace connecting users to the lowest rates for FHA loans in seconds. This free online platform includes handy tools like the FHA loan calculator. Simply enter your home price, loan amount, credit score, and zip code to discover what rates LendingTree’s network of lenders can offer you and to see a detailed breakdown of all the costs.
mortgages.crosscountry
#3
Years of operation: 33 | States: 50 | Annual Closed Mortgage Volume: | $90 billion +

Pros
  • + Quick application process
  • + Nation’s largest FHA lender
  • + Handy educational resources
Cons
  • - No FHA rates on website
  • - Live chat only available in business hours
  • - Rates aren’t always lowest
Quicken Loans is the largest provider of FHA loans. It prides itself on its streamlined application process, assigning applicants to a dedicated FHA loan agent and asking for the minimum documentation required under the Federal Housing Administration’s guidelines.
What is an FHA Loan?
An FHA loan is a fixed-rate loan guaranteed by the U.S. Federal Housing Administration (known as the FHA and operating under the Department of Housing and Urban Development, or HUD) and serviced by a federally qualified lender. FHA loans are designed to help Americans with poor credit, lack of cash for a down payment, or other tough financial circumstances to secure a mortgage and purchase their own home. The terms range from 15 years to 30 years.
Whereas a conventional loan involves just a borrower and lender, an FHA loan involves a third party: the federal government. The Federal Housing Administration essentially takes on the risk for the lender, giving the lender the confidence to offer a mortgage to the borrower. In return for being approved for of an FHA loan, the borrower must purchase private mortgage insurance (PMI), protecting the lender in the case of default or foreclosure.
What are the FHA Loan Eligibility Requirements?
Home buyers with a credit score of 580-619 are eligible for an FHA loan with a minimum 3.5% down payment. Buyers with a credit score of 500-579 are eligible for an FHA loan with minimum 10% down payment. The down payment may come from a gift or grant, making this a popular option for first-time home buyers who don’t have enough cash to meet the minimum requirements on their own. If you don’t have any credit history, the lender will ask for other financial history to assess your application, such as insurance payments and electricity and phone bills.
All borrowers are required to purchase private mortgage insurance (PMI) with an upfront payment of 1.75% of the amount of the loan plus an annual premium of between 0.45% and 0.85%.
The FHA calculates a maximum loan amount per metropolitan statistic area and country each year, based on median home prices for each area. In 2018, it set the maximum loan amount at $679,509 for a 1-unit home in the highest-cost areas – which were mostly located around the San Francisco, Los Angeles, New York, and Washington, D.C metro areas. It set the cap at $294,515 in the lowest-cost areas of the country.
Below are examples of caps for 1-family homes through to 4-family homes:
Location & State 1-Family Max 2-Family Max 3-Family Max 4-Family Max Median Sale Price
Ohio
Cleveland, Elyria
$294,515 $377,075 $455,800 $566,425 $215,000
Colorado
Denver, Aurora, Lakewood
$529,000 $677,200 $818,600 $1,017,300 $460,000
Florida
Miami, Fort Lauderdale, West Palm Beach
$345,000 $441,650 $533,850 $663,450 $295,000
Louisiana
New Orleans, Metairie
$294,515 $377,075 $455,800 $566,425 $196,000
Rhode Island, Massachusetts
Providence, Warwick
$431,250 $552,050 $667,350 $829,350 $375,000
California
San Francisco, Oakland, Hayward
$679,650 $870,225 $1,051,875 $1,307,175 $1,250,000
California
Stockton, Lodi
$391,000 $500,550 $605,050 $751,900 $340,000
Location & State
Ohio - Cleveland, Elyria

1-Family Max
$294,515
2-Family Max
$377,075
3-Family Max
$455,800
4-Family Max
$566,425
Median Sale Price
$215,000
Location & State
Colorado - Denver, Aurora, Lakewood

1-Family Max
$529,000
2-Family Max
$677,200
3-Family Max
$818,600
4-Family Max
$1,017,300
Median Sale Price
$460,000
Location & State
Florida - Miami, Fort Lauderdale, West Palm Beach
1-Family Max
$345,000
2-Family Max
$441,650
3-Family Max
$533,850
4-Family Max
$663,450
Median Sale Price
$295,000
Location & State
Louisiana - New Orleans, Metairie

1-Family Max
$294,515
2-Family Max
$377,075
3-Family Max
$455,800
4-Family Max
$566,425
Median Sale Price
$196,000
Location & State
Rhode Island, Massachusetts - Providence, Warwick
1-Family Max
$431,250
2-Family Max
$552,050
3-Family Max
$667,350
4-Family Max
$829,350
Median Sale Price
$375,000
Location & State
California - San Francisco, Oakland, Hayward

1-Family Max
$679,650
2-Family Max
$870,225
3-Family Max
$1,051,875
4-Family Max
$1,307,175
Median Sale Price
$1,250,000
Location & State
California - Stockton, Lodi

1-Family Max
$391,000
2-Family Max
$500,550
3-Family Max
$605,050
4-Family Max
$751,900
Median Sale Price
$340,000
Other FHA loan requirements include:
  • Borrowers must have a valid Social Security Number and be a U.S. citizen or lawful U.S. resident.
  • The loan can only be applied to a 1-4 unit property used as the borrower’s primary residence.
  • An FHA-approved appraiser must confirm the property meets certain minimum standards. If the appraiser deems the home isn’t up to standard, the borrower may need to pay for the repairs at closing.
  • The borrower’s monthly mortgage payments may not exceed 30% of their gross monthly income.
  • The borrower must have been in consistent employment for at least two straight years or must at have some form of verifiable income.
  • Borrowers that have filed for Chapter 7 bankruptcy in the past 2 years or Chapter 13 bankruptcy in the past year are ineligible.
  • Borrowers that have had a foreclosure in the past 3 years are ineligible.
Benefits to FHA Loans
An FHA loan provides borrowers who find themselves rejected for traditional loans an alternative pathway of securing a mortgage from a credible lender.
The benefits of FHA loans include:
  • Smaller down payment than for a conventional loan;
  • Lower credit score requirements than for a conventional loan;
  • Lower closing costs than for a conventional loan;
  • Open to people with no previous credit history;
  • Open to people who have filed for bankruptcy more than 2 years ago or who have had a foreclosure more than 3 years ago.
  • Higher debt-to-income ratio permitted than for a conventional loan.
  • Lenders may be able to offer some relief to borrowers with FHA loans who are suffering financial difficulties or struggling to make payments. This could take the form of temporary forbearance, lower interest rate, extended payback period, or deferment of part of the loan balance at no interest.
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