FHA Rates

FHA rates are not set by FHA or HUD because they don’t actually loan money.  FHA insures loans from lenders that meet FHA standards. Those standards include the acceptability of the buyer, the appraisal of the property and the title of the property.  Therefore the FHA Rates that you see as the consumer are set by the individual lender making the loan.

A FHA mortgage loan has a very low down payment requirement of around 3.5%. Most borrowers expect to obtain a FHA fixed mortgage rate loan.  The fact that your loan will be FHA approved and insured may result in a slight reduction in interest rates or mortgage insurance cost as compared to a conventional loan.

FHA loans also have insurance costs to the lender, as do most mortgages with a down payment of less than 20%. In the case of the FHA, however, those insurance payments are made to HUD instead of a private mortgage insurance company. On an FHA loan the borrower will be charged an insurance premium between 1.5% - 3.0% of the mortgage amount and the yearly payments thereafter will be between 0% and .55% of the mortgage value. 

FHA Mortgage Rates can and will vary between lenders.  FHA rates change daily and are based on Ginnie Mae bonds sold on Wall Street.  On top of what Wall Street wants then lender has to make a profit on the loan.  Depending on their profit requirement will determine the FHA Rates that they offer the public.

This is basically the difference that you see if FHA Rates among different lenders.  Lender "A" may require a certain yield that is different than lender "B".  The you will see a different FHA Rates between them.

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