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FHA Mortgage Rates Find Lenders for Competitive Rate Quotes

FHA mortgage rates remain at historic low levels with more options for borrowers to refinance with fixed rate options. Most borrowers select the 30-year term when considering FHA interest rates online. If it wasn't for the Federal Housing Administration's lenient guidelines, millions of American borrowers may have missed out on the record low interest rates. Streamline refinance rates also allow FHA customers to lower their FHA rate without paying hefty pre-payment penalties or closing cost. The FHA Mortgage Loan Company will help you find the best FHA rates available for streamline, cash refinancing or for buying a home. Today's FHA mortgage rates are a bit higher than they were last year, but they are still near record lows and the opportunity for people to save money remains strong.

Why is there such a shift of attention from conventional loans to FHA loans?

Conventional loans made by banks and lending institutions that are packaged and sold to Fannie Mae and Freddie Mac are on the decline because of the recent surge in foreclosures. Investors are now wary of investing in mortgage-backed securities (MBS)--the loans packaged and sold by Fannie Mae and Freddie Mac--as a result of the huge losses they have suffered at the hand of the demise of the subprime and Alt-A loan markets. Because investors have such a decreased interest in mortgage-backed securities, lenders have been getting stricter and stricter with their qualification requirements. Now, you need a credit score of at least 660 if you're putting a 20% down payment on a home and a FICO score of 700 if you can't come up with at least 20% down.

The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD) since 1965, offers purchase and refinance loans at rates that are competitive with conventional loans. FHA mortgage rates have dropped several times in 2008 but FHA rates could increase as the Fed continues to talk about inflation. The passage of the Economic Stimulus Act of 2008 temporarily raised the FHA loan limits and conforming loan limits to 125% of the median house price for designated areas in the country, which broadened FHA financing for more borrowers and allows some that currently have jumbo loans the opportunity to refinance to a conforming loan due to the higher conforming loan limits. However, the Economic Stimulus Act, along with its increased lending limits will expire on December 31, 2008. The Housing and Economic Recovery Act of 2008 was passed in July 2008. This created a permanent raise in the FHA and conforming loan limits to 115% of the median home price.

These new laws also are addressing the foreclosure epidemic. Within the Economic Stimulus Act is FHA Secure, a program that allows people who currently have subprime adjustable rate mortgages (ARMs) the opportunity to refinance their loans into fixed-rate mortgage loans. FHA mortgage refinance loans are safe in 2009 and 2010, but the FHA Secure, like the Economic Stimulus Act, will be expiring on December 31, 2008. So, if you want to refinance your mortgage under FHA Secure, you'll need to act quickly. If you miss that deadline, you can refinance under the HOPE for Homeowners Act, the FHA foreclosure rescue program that was passed in July 2008 under the Housing and Economic Recovery Act. Both these laws are only for the purpose of preventing foreclosure, but even if you are not facing foreclosure, you can still refinance your loan through FHA. And, if you are an existing FHA customer, you can refinance for better rates and terms under the FHA Streamline program. You just can't do any cash-back options under this loan. For a cash-out refinance, you'll have to apply for a new refinance loan. And, remember, FHA loans have no pre-payment penalties, so its worth looking into refinancing into a FHA loan, especially if your current loan carries pre-payment penalties.