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FHA Loan Rates

FHA Mortgage Rates for Sep. 19, 2020

FHA mortgage rates can change daily based on market conditions. As you can see in the table below, the average FHA loan rate for a 30-year fixed loan is 2.44% today. This is a 0.059% decrease from yesterday and a 0.047% decrease from a week ago. See how today's rates compare to previous averages, and learn the ins and outs of FHA loan rates below.

* Actual rates will depend upon market factors, will vary by lender, and are based on a borrower's unique financial situation. See more »

Compare FHA Fixed vs. ARM Rates

The Federal Housing Administration insures both fixed and adjustable-rate mortgages (ARMs). A fixed-rate mortgage is generally going to offer the most consistency for a buyer, meaning their payment won't fluctuate much over time. This makes it easy to budget and ensure healthy cash flow over the course of the loan. These loans can come with higher upfront and monthly costs.

Adjustable-rate loans can be best for short-term buyers. Those who are comfortable refinancing into a fixed-rate loan before their rate starts to fluctuate may also benefit from an adjustable-rate mortgage. Still, ARM borrowers should keep in mind the risks of this approach. Mortgage rates change regularly, so the fixed rate they're offered in 5 years may be higher than the one they could secure today.

FHA Mortgage Rate Trends for 2020

FHA Mortgage Interest Rate Daily Trends
Day 30-year fixed rate 15-year fixed rate 5/1 ARM
Sep. 2, 2020 3.069% 2.684% 3.119%
Sep. 3, 2020 3.047% 2.678% 3.083%
Sep. 4, 2020 3.104% 2.72% 2.974%
Sep. 5, 2020 3.162% 2.833% 2.913%
Sep. 6, 2020 3.162% 2.838% 2.897%
Sep. 7, 2020 3.16% 2.835% 2.905%
Sep. 8, 2020 3.117% 2.746% 2.998%
Sep. 9, 2020 3.074% 2.709% 3.064%

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How Fixed-Rate Mortgages Work

Fixed-rate mortgages come with a set interest rate that remains unchanged through the entirety of the loan term. Fixed-rate loans typically have higher interest rates than ARMs, because they provide more protection for the homeowner over time.

How Adjustable-Rate Mortgages Work

An adjustable-rate mortgage, or ARM, has an interest rate that fluctuates over time. Typically, the starting rate is fixed for at least a few years. After a specified number of years (e.g. 3, 5 or 10 years), the rate is increased. The higher rate can result in a higher monthly mortgage payment for the homeowner.

All rate increases should be disclosed before the homebuyer closes on the FHA mortgage. It is common for these rate increases to outweigh the initial savings when compared to a fixed-rate mortgage.

FHA Mortgage Interest Rate Monthly Trends
Month 30-year fixed rate 15-year fixed rate 5/1 ARM
September 2020 2.453% 2.273% 3.679%
August 2020 2.51% 2.486% 3.538%
July 2020 2.454% 2.584% 3.461%
June 2020 3.745% 2.793% 3.606%
May 2020 3.53% 3.175% 3.541%
April 2020 3.268% 3.322% 4.106%
March 2020 3.053% 3.973% 3.74%
February 2020 4.113% 3.689% 3.676%
January 2020 3.446% 3.681% 3.61%
December 2019 4.032% 3.756% 3.61%
November 2019 3.168% 3.481% 3.61%
October 2019 2.842% 3.075% 3.61%

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Frequently Asked Questions

Do FHA loans have higher or lower rates?

FHA mortgage rates can be higher than conventional mortgage rates. However, the higher interest rate also comes with lower down payment requirements and lower credit requirements than conventional loans.

Do FHA mortgage rates vary by lender?

Yes. Some lenders offer better rates than others. However, the cost of an FHA mortgage includes more than just your interest rate as many lenders charge fees for their services. It's important to shop around, and compare FHA lenders.

How are today's FHA loan rates set?

Each lender must take into account numerous economic and market factors when setting their rates. Generally, these factors include:

  • The overall state of the economy
  • Investor demand and stock market performance
  • Federal Reserve policies and expected rate hikes
  • The 10-year Treasury bond yield

To determine the specific rate they will offer a borrower (or set of borrowers), lenders consider data specific to that household. This can include credit score, loan-to-value ratio, total amount borrowed, type of loan and more.

What's the difference between rate and APR?

There are two different rates that come with a mortgage loan: the interest rate and the APR, or Annual Percentage Rate. The interest rate simply reflects the cost you pay to borrow the money from your lender. The APR, on the other hand, includes additional fees and charges directly associated with the loan.

Your points, broker fees, and other charges are factored into the APR, giving you a more comprehensive view of what your mortgage costs you across a year. When applying for mortgage quotes, you'll notice that APRs are typically higher than your offered interest rates.

What are discount points on FHA mortgage rates?

Paying discount points is a way to lower your interest rate (and subsequently your monthly mortgage payments). It's essentially a way of pre-paying your loan's interest up front. The cost of points varies by loan amount, with one point equaling 1 percent of the loan's initial balance.

Paying points can save buyers significantly on their interest, but only if they stay in the home long enough. Short-term buyers generally do not save — or may even lose money — by paying points up front. To determine if paying points is smart in your case, try calculating the break-even point: [Points Cost] / [Monthly Payment Savings] = [Months Until Break-even]. If you plan to stay in the home at least that long, then paying points up front can be a money-saving move.

What is a rate lock?

Since FHA mortgage rates fluctuate often, it's not uncommon for the rate you're quoted to change by the time you close on the home. A rate lock prevents this by freezing the interest rate you've been offered for a set period of time, so you can find a home and close on the property.

Rate lock-in offers vary by lender, but they generally come in 30-, 45-, 60- or even 90-day periods. This number represents how long your rate is locked in and guaranteed for. Some lenders offer free rate locks, while others charge a fee. Fees are generally higher the longer the rate lock period lasts.

It's usually best not to lock your rate until you've found a property (and, ideally, your offer has been accepted). If you lock too early and are unable to close on your home, you may have to pay expensive extension fees or, worse, re-apply for the loan altogether.

Speak with a lender about your options in more detail.

Learn more about FHA loans

FHA Mortgage Rate Assumptions

  • Rates shown assume a purchase or rate term refinance. Rates may be higher for cash out refinance transactions.
  • Annual Percentage Rate (APR) calculations assume a purchase transaction for a single-family, detached, owner-occupied primary residence; a loan-to-value ratio of less than 80%; a minimum FICO score of 740; and a loan amount of at least $200,000 for conforming loans, unless otherwise specified.
  • Rates may improve for loan amounts between $250,000 and $424,000.
  • Rates are subject to change without notice.
  • Guaranteed rate with a 45 day rate lock.
  • Closing Costs assume the borrower's monthly insurance payments and property tax are escrowed.
  • Rates are subject to underwriter approval; not all applicants will be approved.
  • Fees and charges apply.
  • Payments do not include insurance or taxes.
  • Mortgage insurance (MI) is not included in the payment quoted. MI will be required for all FHA and VA loans as well as conventional loans where the loan-to-value is greater than 80%.
  • Restrictions may apply.

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* Rates displayed are based on the National Average, and are provided for illustration only . Rates displayed may not be available, should not be relied upon to make a financial decision and no rate can be guaranteed until locked in by a licensed loan officer. Rate information gathered from Zillow GetRates. For a specific rate quote, contact a licensed lender or Loan Officer to discuss your personal options.

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