This article includes links which we may receive compensation for if you click, at no cost to you.
An FHA loan provides a great option for first-time buyers or anyone with a relatively poor credit score to secure a mortgage more easily. Since the government intervenes by backing the borrower, requirements are more flexible, and down payments are lower.
The process of selecting the best FHA loan is slightly different from that of a conventional mortgage. First of all, you’ll need to ensure that the mortgage broker or financial institution you’re working with actually offer this type of loan.
The good news is that a wide range of banks, credit unions, and mortgage brokers offer FHA loans as part of their mortgage package. There are also some brokers who specialize in FHA loans, which could be an excellent route to go down if you already know this is the type of home loan you want.
Best FHA Lenders for 2020
Here are the top 10 lenders for FHA loans in 2020:
- Quicken Loans Rocket Mortgage – Best Online Lender
- Bank of America – Best Bank for FHA Loans
- Citibank – Best for Alternative Credit Information
- Guild Mortgage – Best for First-Time Homebuyers
- Fairway Independent – Best for Easy Application
- Flagstar Bank – Best for Customer Service
- Navy Federal – Best for Military
- New American Funding – Best for Nontraditional Credit Approvals
- PrimeLending – Best for Sub-Prime Borrowers
- Vylla – Best for Bad Credit
1. Quicken Loans Rocket Mortgage
Best Online FHA Lender
Quicken Loans launched Rocket Mortgage a few years back, and it’s since become the pioneer in the growing online-only lender market. You can check your rates within minutes and continue to use the app, online support, and other digital tools throughout the process, which is extremely user-friendly.
The main disadvantages to Rocket Loans are that there’s no chance to speak to a representative in person, and no alternative credit information is considered – just credit scores and debt-to-income ratio.
2. Bank of America
Best Bank for FHA Home Loans
Bank of America is one of the best-known banks in the country and a reliable name to turn to for your mortgage. Despite being a traditional institution, they do offer a completely online mortgage application, meaning you can have the best of both worlds.
Further benefits are that they accept alternative credit data sometimes and offer extra perks to existing Bank of America customers, such as discounts on origination fees.
Unfortunately, offering an online-only mortgage doesn’t mean Bank of America charges lower fees compared to other online mortgage lenders. The average cost of an application fee is more than $1,000, which is significantly larger than most other lenders. It’s worth considering whether the benefits outweigh this considerable cost.
Best for Alternate Credit Sources
Similarly to Bank of America, Citibank offers discounts to existing customers and are willing to look at less traditional credit sources to help first-time buyers get on the property ladder.
They also charge some fees, such as an application fee and possibly origination fees too. Unlike BoA and most of the lenders on this list, you won’t be able to complete the application process totally online.
4. Guild Mortgage
Best for First-Time Homebuyers
Guild Mortgage specializes in first-time buyers, which is reflected by their customer breakdown – almost half the loans they offer are government-backed. As you’d expect, they also consider alternative credit history data.
However, branches are concentrated in the West and South of the country, so you might not be able to find an office near you – especially if you live in the Northeast or Midwest.
5. Fairway Independent
Best for Quick & Easy Application
Fairway offers a full range of mortgage options, including FHA loans, which are available in all 50 states. It’s quick and easy to apply online – you can even fill out the whole application using the handy phone app.
Since Fairway is a traditional mortgage broker, it’s also possible to go to speak to someone in a physical branch if you’d like to discuss your options. However, the number of branches is somewhat limited.
6. Flagstar Bank
Best for Customer Service
Flagstar is a traditional bank with brick-and-mortar branches and in-person customer service – this is good news to some and bad news to others. If you’d like to talk to a representative before going through with a mortgage, then they could be an option worth considering, especially as their staff are specialists in first-time buyers and low-income households.
They also offer packages tailored to professionals like doctors, lawyers, and accountants.
But, as with many traditional banks, the fees are higher than those of online lenders. The average charge for underwriting and processing is almost $1,300, which is even higher than those of Bank of America.
7. Navy Federal
Best for Military
Navy Federal is only an option for military personnel and their families, so it isn’t available to most people. Still, if you do fit the criteria, you could find yourself with a great rate. The focus is on making mortgage products as affordable as possible, and this is done by considering alternative credit data like rent payments.
Nevertheless, you’ll need to start an official application to find out your rate, which isn’t very convenient.
8. New American Funding
Best for Nontraditional Credit Approval
New American Funding uses nontraditional criteria to assess borrowers for FHA loans and carry out a manual underwriting process to ensure everyone is considered as an individual. Another perk is that you can complete everything online, from receiving your initial quote to tracking the loan through later stages.
Their services aren’t currently available in all states, though – New York and Hawaii are both excluded.
Best for Sub-Prime Borrowers
As the name suggests, PrimeLending focuses on sub-prime borrowers who may have had issues with their credit in the past. They even offer an assistance program to help borrowers cover their closing costs.
Despite operating in a somewhat murky segment of the lending world, PrimeLending has excellent customer feedback and a low number of complaints registered by the Consumer Financial Protection Bureau.
Best for Bad Credit
Vylla is the mortgage offshoot of Carrington Holding Company. They offer an entirely online application process, but you can’t receive online preapproval before you start applying. Their specialty is credit-challenged borrowers and first-time buyers, so they’re a good fit for anyone considering an FHA loan.
But if you live in Massachusetts or North Dakota, you’re out of luck – there’s no service in these two states.
Who Is The Best FHA Lender?
To find the best lender, it’s important to shop around and compare, as the rates and features can be drastically different.
Just because FHA loans are a government-backed program, that doesn’t stop each lender from having discretion over the loan package they offer.