FHA Home loan Rates

Shopping around for a home loan or a mortgage will help you get the best FHA insured loan rates possible as a consumer. 

Price and terms of mortgages and mortgage rates are always negotiable so do your homework and do not be afraid to bargain or make offer to several lenders, especially if you have a good credit rating. 

There are several costs involved in obtaining a good home loan and some may not be obvious initially so be sure to compare and shop and get information from several lenders. The Department of Housing and Urban Development (HUD) always advises you to shop, compare and negotiate.  Remember the law is on your side so fair lending is required.      

FHA Loan Rates

Ask each lender for a list of their current FHA mortgage interest rates.  Then ask them if they are the lowest rates that have been quoted for the month, week and day.  Always ask if they are quoting you fixed or adjustable rates. 

Do not be tempted by a low interest rate, thinking it is fixed, when in reality a broker is quoting you an adjustable rate.  Remember that as the rate increases for adjustable mortgages, so does your monthly payment. 

If you do opt for a lower adjustable rate, based on the current market, always inquire as to whether the payment will drop and how fast if the rates decrease.  These mortgage rate tips will save you money.       

FHA Home Loan Calculators

Ginnie Mae offers FHA insured loans and has an online calculator that projects what you can afford relative to a FHA insured loan. 

For example, if you make an annual salary of $35,000, a car payment of $200 and a monthly credit card payment of $50 the maximum sale price for a home you want to buy should be no more than $120,000 dollars. 

If you earn an annual salary of $50,000, have a monthly car payment of $400 and a monthly credit card payment of $100 the maximum price for a home you want to buy should not exceed $160,000. This information represents only an estimate of your financial capability.   

FHA Fixed Rate 203(b) Loans

The standard FHA home loan is the 203(b). This fixed-rate mortgage loan works well for first time home buyers because it allows you to finance close to 100 percent of the loan which helps to keep payments low and required closing costs at a minimum. 

Home loan insurance on FHA mortgages is typically calculated into the total monthly payment at 0.5 percent of the total home loan amount.  This represents a significant savings compared to the mortgage insurance on a traditional home loan. Following five years the extra mortgage insurance is typically fulfilled and this decreases your total monthly payment.

FHA Loan Points

Points are defined as fees that you pay to the lender for the loan and are linked to the current interest rate.  Typically, the more points you pay the lower your home loan payment. 

A nice source for information about current points that are required to decrease a home loan payment is your local newspaper.  Always require that points be quoted to you in a dollar amount so you can calculate how much you will have to pay the lender.  

FHA Loan Fees

Home loans typically involve many fees, some of which are hidden or are difficult to determine.  These fees include loan origination fees, broker fees or commissions, transaction and settlement fees and closing costs. 

If you are dealing with a credible broker, they should be able to immediately provide an accurate estimate of these fees.  Always take the time to ask your broker question about fees that you do not completely understand. 

Do not be embarrassed as the process is complicated.  Also, be sure to check what the actual fee represents as several items may be lumped together in one fee.

FHA Mortgage Insurance and Down Payments

Inquire as to a particular lender’s requirements for a down payment.  Be sure to ask your lending institution if there are any specials or incentives. 

Some loans require private mortgage insurance.  If so, be sure to ask about the total cost of the mortgage insurance.  Inquire how much your monthly payment will be with the private mortgage insurance included and how long you’re insurance payments will be required during the life of the loan. 

FHA Home Loan Rates and Bad Credit

Less than desirable credit ratings might not prevent you as a consumer from obtaining a good FHA home loan rate.  Poor credit ratings due to illness or temporary job loss will not necessarily force you to deal with high interest rate lenders. 

Don’t be embarrassed about your credit score.  Always explain your own personal situation to the lenders as they should accommodate legitimate personal financial scenarios.  Many consumers have had success with sharing past credit histories, prior to a current difficult situation.  Whether you have good credit or not it is a wise idea to review your current credit score prior to contacting a lender.

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The official U.S. Government FHA Web site is HUD.gov