FHA Mortgage Rates

The FHA offers two kinds of mortgage rates: fixed and adjustable. These rates are offered by mortgage lenders who sell FHA mortgages rather than the FHA directly. There should be little variation in the rate itself, but you may see variations in fees and closing costs. If you're apply for an FHA mortgage, request rates and fees from a few lenders to compare the total costs.

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Fixed FHA Mortgage Rate
The fixed FHA mortgage rate is set by the Federal Reserve Board, which also sets the short-term interest rate. The rates will show some variation from week-to-week, depending on the performance of mortgage-backed securities sold by Fannie Mae and Freddie Mac.

Rates for conventional loans below the FHA conforming limit are often competitive with the FHA rate. You may find that a conventional loan is a better deal because you avoid the 1.5% mortgage insurance fee the FHA charges at closing. However, fixed-rate FHA mortgages have looser lending standards and lower down payment

requirements, which makes it easier to qualify.

Adjustable FHA Mortgage Rates
FHA adjustable rate mortgages adjust annually. The rate is determined by the current 1-Year Constant Maturity Treasury Index, which is averaged weekly. The rate that applies at the time of adjustment is the rate that will apply to your loan for the next year. As with fixed-rate mortgages, there is little variation in these rates between lenders, but fees and closing costs will vary. If fees are bundled into the final loan, your payments may differ between loans.

Low FHA rates make it possible for more homebuyers to become homeowners. If you're in the market for a first home and your price range is within the FHA loan limit, then you should compare FHA loan rates with those of other mortgages before choosing your loan.