FHA loans are house mortgages insured by programs supplied by the Federal Housing Administration (FHA). The rates for FHA mortgages will be similar to conforming rates for lenders such as Fannie Mae and Freddie Mac. The Department of Housing and Urban Development (HUD) site provides historic rate data on FHA-insured 30-year fixed-rate mortgages going back to 1992.
Identification
There are several different kinds of FHA-insured mortgages. The 30-year fixed-rate mortgage has become the most popular. Also available with FHA insurance are 15-year fixed rate mortgages, 1-year flexible rate mortgages (ARMs) and hybrid mortgages using the initial rate fixed for 3, 5, 7 or 10 years before converting to ARMs. After the 30-year fixed rate, the most commonly quoted rates will be the 15-year fixed, ARM and 5/1 hybrid rates.
History
The HUD site provides a downloadable spreadsheet of yearly and annual average rates for FHA 30-year mortgages. In the very first monthly average in October 1991 until May 2010, the FHA 30-year mortgage rate ranged from a low of 5.21 percent up to a top in 8.28 percent. The highest rate was in the very first month of this report, and the lowest rate was in the last month. Computing some averages in the HUD data shows that FHA mortgages averaged 7.14 percent from the 1990s and 6.15% for the first decade of the 21st century.
Resources
The hottest average rates for several kinds of mortgage products can be obtained in the Mortgage Bankers Association weekly poll as well as the Bank Rate interest rate roundup. These reports provide the averages across the United States for mortgage rates such as the 30-year and 15-year fixed rate, 5/1 hybrid mortgages and ARMs. The rates for FHA loans will mirror these national average mortgage rates.
Considerations
FHA-insured mortgages have some limitations and restrictions that influence those loan rates compared to mortgages offered through other programs. FHA loans are assumable and have no prepayment penalties. FHA loans are also offered to borrowers with lower credit scores than other mortgage solutions. These FHA attributes lead to FHA rates which are usually slightly higher than the national average for similar mortgages. In 2009, the average rate for 30-year FHA mortgages reported by HUD was 5.63 percent. Freddie Mac reported a typical mortgage rate of 5.04 percent for the exact same year. For the first five months of 2010, FHA rates averaged 0.30 percent greater than the rates reported by Freddie Mac.
Potential
Using historic data, an estimate to the typical FHA rate are the overall average rates for all mortgages written in the United States plus 0.30 to 0.50 percent. Individual creditors are free to set their own rates and additional costs such as origination fees and discount points. Your knowledge of the current average rate for similar mortgages will allow you to effectively negotiate with your mortgage lender or store different creditors for the best rate in your region.