Today's FHA Mortgage Rates

From LoveToKnow Mortgage

If you’re trying to find today’s FHA mortgage rates directly from the government, you are going to be sorely disappointed.

The FHA guarantees many different types of home loans.

Federal Housing Administration

Since the FHA - or Federal Housing Administration - is not a commercial lender, it does not have much authority as far as rates are concerned. Instead, FHA guarantees loans with lenders to help Americans qualify for a mortgage loan. The FHA will help borrowers:

Finance closing costs
Get affordable down payments
Negotiate other fees

To find the FHA rates available, you have to look elsewhere.

FHA Rate Rules

The FHA does not have any restrictions on how high of a rate a lender can offer with its fixed-rate loans. However, it behooves the lender to come close to standard rates, especially since borrowers with good to excellent credit can easily seek financing elsewhere. People with less than stellar credit are most likely to qualify for 30-year fixed rate loans through the FHA than any other type. All borrowers must pay Private Mortgage Insurance (PMI) on loans with less than a 20% down payment. However, the borrower is allowed to finance those payments with the loan.

Adjustable Rate Rules

The FHA does apply some rules to lenders as far as adjustable rates are concerned. It wants to keep ARMs affordable to help prevent homebuyers from getting in over their heads. The lender must use the one year Treasury index or the one year LIBOR as the index and cannot choose another number haphazardly. The lender is not allowed to make rate increases of more than 1% per year or 5% over the life of the loan for 3/1 and 5/1 ARMs. ARMs with adjustments at seven or 10 years have a yearly cap of 2% and a limit of 6% overall.

Find Averages of Today’s FHA Mortgage Rates

Note that FHA rates offered to you will vary according to how much you would like to borrow, the area you are home shopping in and your credit history. Keeping that in mind, there are several places to look to find an idea of what your rate will be.

Bankrate.com is wonderful source to find average rates by state. You can even find results for national and local markets.
Mortgage101.com offers rates for both 30-year and 15-year fixed rate FHA loans with an option to check local rates.
Mortgageloan.com will quote rates for both initial loans and FHA refinances
Mortgage-x.com offers the latest indexes.

The best way to find out what your rate will be on an FHA loan is to go to a lender and get a preapproval. Even with all the guesswork and predictions on today’s FHA mortgage rates, you will not be able to determine exactly what your rate will be until you apply.

Considerations

Since the FHA works on behalf of the homebuyer, it will not guarantee a loan for anyone that does not appear to be in a postition be able to repay the mortgage. The FHA will require your lender to check your income, your assets and your debt very carefully before allowing the loan to go through. People with very bad credit or unreliable employment history are unlikely to qualify for these loans at any rate. If you find yourself in this situation, you may have to wait a couple years so you can present yourself as a more prime candidate for a loan.