Best FHA Lenders of 2021

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The Federal Housing Administration, or FHA for short, is a government agency charged with improving housing standards and ensuring fair and high-quality financing systems for both first-time and existing homeowners. One of the agency's major initiatives is the FHA loan program, which helps more people get approved for affordable mortgages

While FHA loans are part of a government program, you don’t get the loan directly from the government. Instead, loans come from an FHA lender that works within the government. To qualify for a such a loan, you have to meet some minimum requirements. FHA loans are available for borrowers with credit scores as low as 500, though you’ll need at least a 580 to qualify for a 3.5% down payment. With 500 or higher, you’ll have to put down 10% on a home purchase. Many lenders, however, may set higher credit requirements.

Before deciding on a lender, be sure to shop around as each may have a different rate or fees. Other considerations include customer service, physical locations (if that’s something you care about), and the typical customer they work with. For example, a self-employed individual may choose a different company than someone with a traditional job. With all of that in mind, here are the top FHA lenders offering FHA loans to borrowers like you.

Best Overall: Rocket Mortgage from Quicken Loans

Rocket Mortgage from Quicken Loans
Courtesy of Rocket Mortgage from Quicken Loans

As of late 2017, Quicken Loans overtook Wells Fargo to become the number one mortgage lender in America. The Detroit based mortgage company originated $25 billion in mortgages in Q4 alone, and there’s a good reason for it. Quicken Loans does a great job of taking and processing mortgage applications online. It may be the easiest lender to use for digital natives, but clearly, borrowers from a wide range of backgrounds see success at Quicken Loans.

Rocket Mortgage applicants need the minimum 580 credit score and 3.5% down payment required by the FHA loan program. After testing out several online mortgage applications, this one arose as a clear winner thanks to an ability to link online bank accounts to prove funds, easy-to-understand menus and prompts, and a quick and paperless approval.

You don’t get the same personal service with an online lender as an offline one, but if that leads to saving time and money, who needs someone in a suit sitting behind a fancy desk? While the primary experience is online, you can call and speak to a human on the phone if you’d like. Quicken Loans does offer some products outside of the Rocket Mortgage product umbrella, but Rocket Mortgage is definitely the leader and most recognized part of the Quicken Loans family of mortgage products.

Best Traditional Bank: Citi

Courtesy of Citi

Big brick and mortar banks all offer mortgages, but CitiMortgage stands out thanks to its flexible programs for first time and low credit borrowers. If you are worried about your approval odds thanks to a few credit mistakes in your past or a relatively short credit history, Citi may come through as a good option. Citi does not publish a public minimum credit score.

As a huge, nationwide bank, Citi’s mortgages are available in all 50 states. Citi is also willing to consider successful rent history and other nontraditional credit data when approving new loans. However, as a big bank, you can expect less favorable interest rates and fees than some other lenders. But when you have a tough time getting approved to buy a home, higher fees may be worthwhile.

Best for the Self-Employed: New American Funding

Courtesy of New American Funding

If you have variable income due to self-employment, a short credit history but good income, or any other combination of factors that might make your application a little tougher to approve, New American Funding should be high on your list.

While you’ll still need to meet the FHA loan credit score and down payment requirements, New American Funding is a bit more flexible when it comes to approvals. The company gives each application a manual review, which may give you better approval odds than a purely computerized loan underwriting process. But you’ll still need a minimum 580 credit score to qualify, and 3.5% down.

While New American is a leader in its underwriting for some applicants, it is far from the best when it comes to the digital experience. The online systems are disjointed and clunky. But if you are self-employed and struggle to meet mortgage criteria elsewhere, putting up with subpar online systems is well worth it.

Best Credit Union: PenFed Credit Union

PenFed Credit Union
Courtesy of PenFed Credit Union

PenFed, short for Pentagon Federal, is another top credit union for the military and their families. But even if you are not part of the armed forces, you can join PenFed with a small donation to a designated nonprofit. That makes PenFed a good choice for both military and civilian applicants alike.

While its computer systems are a bit antiquated, great customer service and competitive rates make it a serious competitor for both FHA loans and other mortgages. One standout product is the 15/15 ARM, which is a great money-saving option for any family that expects to move in 15 years or less, as is very common with the military.

PenFed has been growing lately with a nationwide focus. It has new credit cards and other products in addition to mortgages that could make PenFed a good option for all of your banking needs. PenFed does not publish a minimum FHA credit score, but does indicate on its website that “you’ll still want a decent credit history to get an FHA loan.”

Best for Poor Credit: Carrington Mortgage Services

Carrington Mortgage Services
Courtesy of Carrington Mortgage Services

Carrington is a large mortgage lender that is willing to go down to the bottom 500 credit score allowed by the FHA lending program. That makes Carrington a top choice for borrowers struggling for approval or those with a series of mistakes living on their credit report. While high credit borrowers can save looking elsewhere, Carrington is a good “lender of last resort” for lower credit applicants.

While those with lower credit can expect to pay more for a loan, it may be worth it to get your foot in the door of homeownership with an appropriate mortgage. If you are worried, speak to your mortgage officer about your option to add a co-borrower, get a gift for down payment funds, and other opportunities afforded by the FHA program to help you get into the right home.

Best for Military: Navy Federal

Navy Federal
Courtesy of Navy Federal

Credit unions are like banks in most ways with one very important difference: credit unions are not for profit. That means they can offer lower interest rates and lower fees for borrowers. If you have a military connection, you may find the best deals at Navy Federal Credit Union.

Membership at Navy Federal is limited to members of any branch of the US military, Department of Defense, military veterans, and their families. If you qualify, you should get some of the best interest rates around. If you are a military member or veteran, also consider the VA loan program as another good alternative.

Reviews are generally positive and show that many customers have stuck with them for decades and multiple mortgages, in addition to other financial services. Navy Federal does not publish a public minimum FHA credit score, so plan to qualify with standard FHA minimums.

Best for Applications On the Go: loanDepot

Courtesy of loanDepot.

High-tech borrowing experiences make things easier on most modern applicants, and loanDepot is a leader in this space. While you may need some paperwork and records to complete your application at home, loanDepot is one of a few lenders that makes it easy to apply for a loan on mobile devices.

LoanDepot is one of the biggest non-bank mortgage lenders in the country and offers a network of physical branches in addition to the online experience. While they lag behind leader Rocket Mortgage today, you can already see the foundation being set for an improved online experience. But with the hybrid online/phone/physical experience, you can get your FHA borrowing needs taken care of with little worry at loanDepot. Just look out for the fees when shopping around to make sure you get the best deal. LoanDepot requires a minimum 580 credit score and 3.5% down payment.

Best High-Tech Yet Personal: PennyMac

Courtesy of PennyMac

California-based PennyMac offers some physical branch locations, but the online experience here is what helped it earn a spot on the best FHA lenders list. PennyMac, like most on this list, offers far more than FHA loans. PennyMac scores well for FHA refinancing and first home purchases.

In the FHA lending space, PennyMac is in the top-tier when it comes to technology and managing your loan online. But after you fill out the online form, you’ll still connect with a human loan officer by phone. The combination of personal and digital interactions at PennyMac lead to a comfortable, efficient application and approval process.

One downside at PennyMac is customer service. Ratings and reviews show that problems do arise from time to time and may be frustrating to solve. However, if everything runs smoothly you should find faster processing than at some competitors. PennyMac uses a 580 minimum score to qualify and requires a minimum 3.5% down payment.