Do Washington Conventional Loans Offer Lower Rates Than FHA?

November 8, 2017
Last updated:
November 29, 2023
In This Article

Borrowers want to be able to secure a lower interest rate on their mortgage to save money over the life of their loans. But what’s lower right now: rates for FHA loans or conventional loans?

Borrowers who use FHA loans in Washington State often enjoy lower mortgage rates than those who use conventional loans to buy a house. But over the recent past, conventional loan rates have been slightly lower than those of FHA loans.

Conventional Mortgage Rates Currently Very Close to FHA Rates

According to recent data on mortgage rates from Freddie Mac, average mortgage rates for conventional home loans in Washington and across the nation were very close to those assigned to FHA loans.  

Definition: An FHA loan is one that is insured by the government, through the Federal Housing Administration. A conventional home loan is one that does not have any kind of government insurance or backing. That is the primary distinction.

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According to recent data:

  • The average interest rate assigned to 30-year fixed-rate conventional loans with conforming balances sits at 6.58%, as of the week of November 29, 2023, according to Freddie Mac.
  • By comparison, the average rate assigned to a 30-year fixed-rate FHA was 6.58% in Washington during the same week in 2022.

So that helps to answer a common question among borrowers: Do Washington FHA loans offer lower mortgage rates than conventional? In many cases, they do. But in some cases, they don’t, as is currently the case. The current average mortgage rate for FHA loans can be higher than those assigned to conventional (non-government-insured) home loans.

Of course, these are just averages. The actual rate assigned to a particular home loan can vary based on a number of factors, including the type of loan being used and the borrower’s credit score. The best way to find out what kind of mortgage rate you can get on an FHA or conventional loan in Washington is to request a quote. And we can help you with this.

Non-Government Loans Are Still More Popular in Washington

FHA home loans in Washington often offer lower rates (on average), but the “standard” conventional mortgage loan is still the most popular financing option among borrowers these days.

Related: Loan options for first-time buyers

The most popular type of home loan in Washington State and across the country is the 30-year fixed-rate conventional home loan. These mortgage products are originated, and sometimes insured, solely within the private sector. They do not have any government insurance or guarantee.

And the fixed-rate structure means that the borrower’s mortgage rate will typically stay the same for as long as they hold the loan. The 30-year term allows borrowers to spread their payments out over a longer period of time, thus reducing the size of the monthly payments.

Additionally, some borrowers choose conventional loans because it allows them to avoid paying mortgage insurance. If you use a conventional loan with a down payment of 20% or more, you could avoid this added cost (which is typically required with smaller down payments).

Check out our mortgage loan limit tool for conventional, FHA, and VA loans, as well as the 2024 conventional loan limits for Washington State.

Disclaimer: This article includes average FHA and conventional rates for the last week of November, 2023. Data was provided by third-party sources not associated with our company. We have presented them here as an educational service to our blog readers.

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Need a Home Loan in Washington?

Will you need mortgage financing to buy a home? At Sammamish Mortgage, we offer a wide variety of mortgage programs and tools with flexible qualification criteria, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. We have been serving the entire state since 1992, as well as the broader Pacific Northwest region that includes Washington, Oregon, Colorado, and Idaho. Please contact us today with any financing-related questions you have.

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