How To Get A Fha Loan With Bad Credit

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10 Best Lenders for FHA Loans in November 2021

FHA loans offer several benefits including low rates and low down payments. Compare some of the best FHA lenders to find the right fit for your needs.

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You might think all Federal Housing Administration lenders are the same. But even when you're looking for an FHA loan , it's always smart to shop at least three lenders. Their mortgage rates, fees and other costs to borrow can vary substantially.

NerdWallet has picked some of the best FHA lenders in a variety of categories so you can quickly determine which one is right for you.

Tap to learn how COVID-19 may affect mortgage shopping

The coronavirus pandemic introduced some new challenges to getting a mortgage. Many lenders facing high loan demand and staffing issues increased their fees, adjusted minimum required credit scores or temporarily suspended certain loan products. While some products and business practices have returned to pre-pandemic levels, you might still find delays and limited options. If you can't pay your current home loan, refer to our mortgage assistance resource. For information on how to cope with financial stress during this pandemic, see NerdWallet's financial guide to COVID-19 .

NerdWallet has picked some of the best FHA lenders in a variety of categories so you can quickly determine which one is right for you.

Tap to learn how COVID-19 may affect mortgage shopping

Summary of Best Lenders for FHA Loans in November 2021

Quicken Loans

Quicken Loans : NMLS#3030

Quicken Loans

Why we like it

Good for: borrowers who appreciate convenience online and on the go for a fully digital home loan experience with consistently acclaimed customer service.

Pros

Caters to self-service users who want to apply for a home loan online and talk to a human only as necessary.
Estimates the loan amount you'll qualify for within minutes.
Streamlines the online process with document and asset retrieval capabilities, including the ability to edit your preapproval letter.

Cons

Getting a customized interest rate requires a credit check, which can affect your credit score.
Doesn't offer home equity loans or lines of credit.
Lender fees are on the high side and the fees aren't offset by particularly low mortgage rates, according to the latest data.

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AmeriSave

AmeriSave : NMLS#1168

AmeriSave

Why we like it

Good for: borrowers seeking government loans, which are known for offering credit flexibility and low- or no-down-payment benefits.

Pros

A good variety of loan types and products.
A mobile-friendly application process.

Cons

An average loan origination fee that's higher than the national median.
Doesn't offer home equity loans, home equity lines of credit or home improvement loans.

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PennyMac : NMLS#35953

Why we like it

PennyMac excels in online capabilities and makes it easy to shop rates online. Average origination fees are higher than other lenders, and home equity lines of credit and jumbo mortgages were suspended due to the COVID-19 pandemic.

Pros

Offers a full range of online capabilities, including e-signatures and online loan process tracking.
Displays custom rate quotes based on home value, down payment or equity, ZIP code and credit score range.

Cons

Origination fees are higher than the median for all lenders.
Doesn't currently offer jumbo mortgages or home equity lines of credit.

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Carrington

Carrington : NMLS#2600

Carrington

Why we like it

Good for: first-time home buyers or credit-challenged borrowers interested in government loan products.

Pros

Offers multiple low-down-payment loan programs.
May consider alternative credit data, like bank statements and rent payments.

Cons

To get sample rates, you'll have to speak with a loan officer.
Doesn't offer home equity loans or HELOC.

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Caliber

Caliber : NMLS#15622

Caliber

Why we like it

Good for: first-time home buyers, veterans and those who may have credit challenges to overcome.

Pros

Offers extensive educational resources for military borrowers.
Provides digital tools for a streamlined application process.
Participates in some state down payment assistance and first-time home buyer programs.

Cons

No mortgage rates displayed online.
Doesn't offer home equity loans or lines of credit.

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Alterra

Alterra : NMLS#133739

Alterra

National / Regional

Regional

Why we like it

Good for: first-time home buyers and those with nontraditional incomes.

Pros

Offers an ITIN qualification path for borrowers ineligible for Social Security numbers.
Has a digital application process.
Offers several mortgage options for low- to moderate-income borrowers.
Borrowers can qualify with income from self-employment and other nontraditional sources.

Cons

No mortgage rates published online.
No home equity loans or lines of credit.
Generally has higher rates and fees than other lenders.
Branch offices not available in all states.

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PrimeLending

PrimeLending : NMLS#13649

PrimeLending

Why we like it

Good for: borrowers looking for closing cost assistance, as well as those seeking to renovate or to build a new home.

Pros

Full online application includes document uploads and automated loan updates.
Offers a "float-down" interest rate lock.
Offers a proprietary closing-cost assistance program.

Cons

No online mortgage rates — you have to contact the lender for info.

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Stearns Lending : NMLS#1854

Why we like it

Stearns Lending offers a full menu of purchase and refinancing loans, but no home equity loans or lines of credit. Interest rates aren't posted online.

Pros

Offers conventional and government-backed loans with low-down-payment options, including FHA 203k renovation loans.
Has a mobile app to help streamline the application process.
Has a loan program for medical doctors and dentists with down payments as low as 5%.

Cons

Doesn't display information online about rates and fees.
Doesn't offer home equity loans or HELOCs.

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Mr. Cooper : NMLS#2119

Why we like it

Good for: borrowers looking for lower credit score requirements and those who don't mind fully remote customer service.

Pros

Once your loan is in process, offers a robust digital experience.
Will consider alternative credit data for FHA borrowers.

Cons

Doesn't offer an online application.
Requires a call or email for personalized rates.

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Freedom Mortgage : NMLS#2767

Why we like it

Freedom offers a typical range of home loan options, but rates are not available on its website.

Pros

Offers conventional, FHA, VA, USDA and jumbo loans.
Multiple customer service options, including brick-and-mortar branches and online appointment setting.

Cons

No mortgage rates displayed online.
Does not offer home equity loans or lines of credit.

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Qualifying for an FHA loan

To qualify for an FHA loan, you'll need a credit score of at least 500 with a 10% down payment. To determine if you're eligible for the lowest FHA down payment — just 3.5% — underwriters will look for a score of 580 or higher. You'll also need to have a debt-to-income ratio of 50% or less.

In addition to money for your down payment, you'll also need funds to cover FHA closing costs and an upfront mortgage insurance premium, which for FHA borrowers is 1.75% of the loan amount. Both the upfront insurance premium and the closing costs can be rolled into the total amount of the mortgage.

Bear in mind that these are the FHA's qualification guidelines; individual lenders may impose additional rules. That's just one reason it's worth comparing several lenders.

Are FHA loans only for first-time home buyers?

No, you do not need to be a first-time home buyer to use an FHA loan. Lower credit score minimums and down payments certainly make FHA loans attractive to first-time home buyers , but current homeowners are eligible, too. In fiscal year 2020, about 83% of FHA purchase loans were made to first-time home buyers — which means 17% went to borrowers who were already homeowners.

Can you get an FHA loan if you have student loans?

Yes, you can get an FHA loan if you have student loan debt, though you'll still have to meet FHA debt-to-income requirements . FHA student loan guidelines state that lenders must include all student loans when calculating a borrower's debt-to-income ratio. If your payments are currently deferred, your lender will consider your "monthly obligation" to be 1% of your total student loan balance.

Methodology

NerdWallet's star ratings for mortgage lenders are awarded based on our evaluation of the products and services each lender offers to consumers who are actively shopping for the best mortgage. The five key areas we evaluated include the variety of loan types and products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available Home Mortgage Disclosure Act data. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team.

To recap our selections...

NerdWallet's Best Lenders for FHA Loans in November 2021

Quicken Loans: Best for online experience
AmeriSave: Best for lower credit score borrowers
PennyMac: Best for online FHA loan experience
Carrington: Best for nontraditional credit histories
Caliber: Best for veterans seeking FHA loans
Alterra: Best for overall FHA loan experience
PrimeLending: Best for overall FHA loan experience
Stearns Lending: Best for FHA 203k renovation loans
Mr. Cooper: Best for lower credit score borrowers
Freedom Mortgage: Best for veterans seeking FHA loans

Frequently asked questions

Getting an FHA loan isn't especially different from what you'd do to get a conventional mortgage . You don't apply to the Federal Housing Administration itself; you'll work with an FHA-approved mortgage lender that likely offers other types of home loans in addition to FHA loans.

FHA loan preapproval is similar to preapproval for other mortgage types, though you'll need to work with an FHA-approved lender. You'll need to provide documentation of your financial status, which can include employment history, bank account info and any current loan payments. Getting a mortgage preapproval from more than one lender lets you compare not only rates but also all the fees and conditions each lender would apply.

Compare at least three FHA lenders when you're looking for an FHA loan. While the FHA sets minimum qualification guidelines, lenders can ask for higher credit scores or lower debt-to-income ratios. Lender fees can also vary. But FHA mortgage rates may make the biggest difference, both in how much you'll pay each month and how much interest you'll pay over the life of the loan. Run the numbers with an FHA mortgage calculator to estimate your payments.