The most popular FHA home loan is the fixed-rate loan known as the 203(b). It often works well for first time home buyers. It allows individuals to finance up to 97% of their home loan and helps to keep down payments and closing costs.

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October 7, 2015
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Fixed Rate FHA Loans

The Popular 203(b) Federally Guaranteed Mortgage

Home ownership rates in America continue to increase at a steady rate due in a large part to the implementation of FHA home loans more than seventy years ago. Over the years, FHA has helped Americans gain the financial independence that comes with owning a home. By creating jobs and reasonable mortgage rates for the middle class, financing military housing, and producing housing for the low income and the elderly, FHA has helped Americans become some of the best housed people in the world with over 73 million Americans currently owning their own homes.


By serving as an umbrella under which lenders have the confidence to extend loans to those who may not meet conventional loan requirements, FHA's mortgage insurance allows individuals to qualify who may have been previously denied for a home loan by conventional underwriting guidelines.

FHA loans benefit those who would like to purchase a home but haven't been able to put money away for the purchase, like recent college graduates, newlyweds, or people who are still trying to complete their education. It also allows individuals to qualify for a FHA loan whose credit has been marred by bankruptcy or foreclosure.


The most popular FHA home loan is the 203(b). This fixed-rate loan often works well for first time home buyers because it allows individuals to finance up to 97 percent of their home loan which helps to keep down payments and closing costs at a minimum. The 203(b) home loan is also the only loan in which 100 percent of the closing costs can be a gift from a relative, non-profit, or government agency.

Insurance on FHA mortgages are often rolled into the total monthly payment at 0.5 percent of the total loan amount which is roughly half of the price of mortgage insurance on a conventional loan. After five years or when the loan balance reaches 78 percent, the additional mortgage insurance is typically met and therefore drops off the total monthly payment.


It is not necessary to meet a minimum income requirement in order to qualify for a FHA loan but debt ratios specific to the state in which the home will be purchased have been put into place to prevent borrowers from getting into a home they cannot afford. This is done through a close analysis of income and monthly expenses.

FHA Loan Articles

Read About Mortgage News, FHA Updates, and Guidelines
Stay Informed About Home Equity Conversion Loans

The Consumer Financial Protection Bureau (CFPB) is a government watchdog agency designed to help consumers get the most out of their credit, avoid scams, and learn how to be more financially literate. It has become aware of some lenders using false or misleading language in advertising about HECM loans.

Owner-Occupier Single Family Home Loans

There are lots of reasons why house hunters want to purchase homes with an FHA mortgage loan. Finding your dream home is the obvious motivation for many, but others are looking for low-cost mortgages on property they can use as an investment--a rental or mixed use property.

What if the Buyer or Seller Disagrees on the Appraisal?

Appraisals are used to make sure the home to be purchased with an FHA mortgage loan meets minimum standards and should never be confused with a much more in-depth home inspection. The appraisal also determines the fair market value of the property.

Tax Extensions and Your Mortgage

One important issue many borrowers have had to face in recent years is the tax consequences from a home loan modification or similar alteration to a mortgage where part of the debt is forgiven, cancelled, or written off by the lender.

Significant Financial Changes Before Loan Closing

Consider this true-life situation: a borrower applies for a home loan, gets approved, and schedules a closing date. In the meantime, the lender reviews the borrower’s financial data and notices significant overdraft fees associated with a borrower’s checking account.