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Accurate as of October 16, 2024

Best FHA Loans October 2024

FHA and first-time homeowner loans are approaching their most affordable rates in years. These loans typically offer lower down payments and flexible credit requirements for easier home buying.

What is an FHA and First-Time Homeowners Loan?

Both FHA and first-time homeowner loans are specifically designed to help new and/or bad-credit buyers secure financing for their homes. These loans often feature low interest and down payment assistance to help make homeownership more attainable.

» Best home buyers loan reviews ➜


What’s on This Page?

  1. Featured lenders (above)
  2. First-time home buyer loans
  3. First-time home buyer programs
  4. FHA loans
  5. How to get the best loan
  6. How to apply
  7. How rates are calculated
  8. FAQ

First-Time Home Buyer Loans

FHA Loans

  • Lenient credit requirements and down payment assistance programs
  • Lenders can takeover a current FHA loan

Conventional Loans

  • Lower rates for good-credit individuals with down payment requirements from 3-20%

EEM Mortgage (Energy-Efficient Mortgage)

  • Finance energy-efficient improvements into home purchase for future energy bill savings
  • Can be combined with other products like FHA or VA loans

Additional

  • VA Loans – for veterans, active-duty service members, and eligible spouses
  • USDA Loans – for rural and suburban homebuyers with select income limits
  • Good Neighbor Next Door – for law enforcement, teachers, firefighters, and emergency medical workers
  • Home Loans – for financing home improvements or renovation projects
    See home loans ➜

First-Time Home Buyer Programs

A first home buyer program is designed to assist new owners in purchasing their first home with various forms of financial support and incentives.

Down Payment Assistance

  • Help buyers cover the upfront costs of buying a home
  • Offers an easier to transition into ownership

Closing Cost Assistance

  • Reduce or erase certain fees associated with finalizing a mortgage
  • Requires lower out-of-pocket expenses

FHA Loans

An FHA loan is a mortgage insured by the Federal Housing Administration. It's designed to help low-to-moderate-income homebuyers with less-than-perfect credit qualify for loans.

FHA 203k Loan

The FHA 203k rehab loan allows you to finance both the purchase and renovation of a home with one mortgage, making it ideal for buyers looking to fix up a property.

FHA Streamline Refinance

This option simplifies refinancing an existing FHA loan with minimal documentation and no appraisal required, making it quicker and less expensive.

FHA Cash-Out Refinance

Homeowners can tap into their equity by converting it into cash for other needs, making it a great option for those looking to access funds from their home’s value.

Requirements

  • Minimum credit score of 500 (with a 3-10% down payment)
  • Debt-to-income ratio of roughly 43% or less
  • Must occupy the property as your primary residence

Benefits

  • Lower monthly payments and favorable loan terms tailored for new buyers
  • Achieve the dream of owning a home with assistance and suppor
  • Secure an asset that has investment potential and earn equity in your home

How to Get the Best Loan

Save money with a lower rate

The right lender can make a significant difference in securing the best first-time homeowner loan or FHA product. You could secure a rate that saves you tens of thousands over the life of your loan.

Look for lender reviews with positive ratings and high customer satisfaction, and use online lender sites to compare different rates and fees to find the most cost-effective option.

Improve your likelihood of approval

Improving your credit score, saving for a larger down payment, and reducing your debt-to-income ratio can all help increase your chances of getting approved for a mortgage.

Consider using the rates you qualify for online as leverage for negotiation with other lenders, credit unions, brokers, or banks.

How to Apply

The application for any home purchase or mortgage product will include information about your financial situation, income, assets, debt, credit, and employment history.

Steps to apply

  1. Research Lenders
    • Begin by comparing 1st-time home buyers loan, FHA loan, and other options from reputable lenders
  2. Determine Your Budget
    • Evaluate your income, expenses, and savings
  3. Choose the Right Mortgage Type
    • Decide the loan type and financing solution you need
  4. Get Pre-Approved
    • See what rates you qualify for to better compare different lenders
  5. Compare Offers
  6. Submit Application
    • Submit financial documents (pay stubs, bank statements, tax returns) and details about your property

Online lenders typically offer faster approval times, providing pre-approval within minutes and full approval within 3-10 days. A traditional bank pre-approval can take a few days and full approval can take several weeks.

How are Rates Calculated?

Calculating your rate

Credit score, loan amount and terms, down payment, market conditions, and more can affect your individual rate.
Learn more ➜

Fixed-rate vs. adjustable-rate terms

Fixed-rate mortgages (FRMs) and adjustable-rate mortgage (ARMs) terms are each suitable for different financial situations and homeownership goals.

Generally, fixed-rate mortgages are slightly harder to qualify for due to their typically higher credit score and income requirements compared to adjustable-rate mortgages.

How We Rank?

Learn more about how findmortgages.com rankings are determined.

Frequently Asked Questions (FAQ)

An FHA loan is a mortgage insured by the Federal Housing Administration. It's designed to help low-to-moderate-income homebuyers qualify for loans with lower monthly payments and minimal out-of-pocket fees.
First-time homeowner loans are specifically designed to help new buyers secure financing for their homes. These loans often feature low interest rates and down payment assistance programs to help make homeownership more attainable.
No, FHA loans are not exclusively for first-time homebuyers, though they are popular among first-time buyers due to their lower down payment requirements and more lenient credit score criteria. Repeat buyers, those who have previously owned homes, can also apply for FHA loans.
Your credit score is crucial in determining your eligibility and the interest rate you’ll receive. Higher scores generally lead to better terms and lower rates. If your credit score is lower, there are still many options available including FHA loans, VA loans, online lenders, and applying with a co-signer who has a higher credit score.
Improving your credit score, saving for a larger down payment, and reducing your debt-to-income ratio can enhance your chances of approval.
While the answer varies based on individual needs, the best banks for home buyer loans typically offer competitive rates, excellent customer service, and various loan options. Consider both national banks and local credit unions.