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Current FHA Mortgage Rate
Current FHA rates average 3.96% nationally, and have changed by 0.99% over the past twelve months. This is not an APR and does not factor in any closing costs or fees.
Current FHA Interest Rates 2018-2019
Interest rates on FHA loans largely mirror the rates of conventional mortgage loans over time. Over the past year, FHA interest rates have maintained a spread of 1–4 basis points over comparable conventional mortgages before widening to 8 basis points in April.
Despite the close proximity of rates, FHA borrowers will likely pay more than conventional borrowers over the long run due to the presence of PMI, which can cost anywhere between 0.5% to 5% of your initial loan amount annually. Check the table below to see how FHA interest rates have changed over time.
|Avg FHA Loan Rate||Avg 30-Yr Mortgage Rate||Difference|
The biggest advantages to FHA loans are the reduced down payment and credit requirements. FHA loans allow a down payment of as low as 3.5%, with a credit score of at least 580. However, borrowers with credit scores of as low as 500 can qualify for an FHA loan, provided they put down at least 10% of their home's value upfront. If you're a veteran, you may be able to obtain even more lucrative terms through a VA loan.
How Do FHA Mortgage Rates Compare to Conventional Mortgage Rates?
FHA loans usually feature comparable or lower interest rates than conventional mortgages, but borrowers will find the long-term costs on FHA loans to be greater due to the presence of private mortgage insurance (PMI). Lenders are willing to underwrite FHA loans to borrowers with poor credit due to the insurance protection offered by PMI, which covers their losses in the event that the homeowner defaults.
Comparing the current average 30- year FHA loan rate of 3.96% to the average conventional mortgage rate of 4.62%, we saw spreads widen relative to last year's mortgage rates, demonstrating that FHA rates have generally become more expensive versus conventional mortgage loans. The maximum spread between FHA rates and conventional rates over the past 12 months was 0.03%.
Borrowers should be aware that they will be responsible for PMI premiums for as long as their FHA loan remains outstanding. However, most borrowers choose to remove PMI by refinancing into a conventional mortgage after they've had some time to build up their equity and credit profile. If you're a first time homebuyer, Fannie Mae's HomeReady and Freddie Mac's HomePossible mortgage programs offer similar terms to FHA loans, but allow you to stop paying PMI once you've achieved a 22% equity stake in your home.
Online lenders, credit unions and national banks all offer FHA loans, but their quotes will vary depending on which lender you contact. It's a good idea to compare FHA rate quotes from multiple lenders to find the most competitive rate possible.
FHA Interest Rate Forecast: Lower Rates and Faster Closings
We saw interest rates drop over the last quarter, with FHA loan rates declining by as much as 0.99% from the same time last year. Average closing times for both FHA purchase and refinance loans have declined by about a week in the first quarter of 2019, reflecting a faster closing process overall, while new FHA loan issues favor purchase mortgages over refinances.
Market volatility and comments from an accommodative Fed have caused rates to drop in the early part of 2019. FHA interest rates have gotten significantly cheaper as a result, making it an attractive time to secure financing. While they still remain at historically low levels, FHA interest rates are tied to the target rate set by the Federal Reserve and are likely to increase with every rate hike from the Fed's Board of Governors.
Shortened FHA Loan Closing Times
The average time to close on an FHA loan decreased by around one week relative to the same time in 2018. As of April 2019, it takes an average of 40 days to close on an FHA loan, which is seven days less than December 2018's high of 47 days. This could reflect a more efficient underwriting process or greater capacity to originate new FHA mortgages.
How Many Days Does it Take to Close an FHA Loan?
Generally, FHA loan holders are more likely to refinance into conventional mortgage loans rather than FHA loans to eliminate the need for PMI payments. Rising interest rates in late 2018 largely made refinancing a less attractive prospect for almost all existing homeowners. As a result, we've seen FHA loan volume moving away from refinancing and shifting in favor of home purchases, which now make up roughly 78% of all new FHA loan originations. That proportion will likely increase assuming interest rates keep rising.
Top Mortgage Lenders: Current FHA Interest Rates
FHA loan applications involve a number of steps that aren't required in a conventional mortgage application, which makes it important to find an experienced FHA lender. The mortgage companies below originated the plurality of FHA loans in 2018, which makes them an excellent choice for borrowers seeking reputable advice.
Bank FHA Rates in 2019
|Average Loan Amount 2019||30-Year FHA Loan Rate|
|Bank of America||$189,954||4.63%|
The average loan amount comprises the mean of all FHA loans issued by each lender in 2018. Loan amounts were tallied on a national basis and reflect all residential mortgages issued between January and August of 2018. Both home purchases and refinances were counted in the data set. The interest rates cited are not APRs and do not reflect the impact of any closing costs, points or monthly insurance payments that home buyers will be responsible for.
The mortgage rates above may change frequently and rely on purchase cost, down payment and credit score assumptions made for a hypothetical FHA application. The lenders listed above are the largest issuers of FHA loans by volume. In addition to FHA loans, all lenders cited also offer other mortgage products like conventional mortgages and VA loans, making them excellent choices for borrowers cross-shopping mortgage products.