According to a recent industry survey, borrowers who use FHA loans in Washington State often enjoy lower mortgage rates than those who use conventional loans to buy a house.
Report: FHA Mortgage Rates Lower Than Conventional
On November 8, 2017, the Mortgage Bankers Association (MBA) publish the results of its latest weekly mortgage application survey. This survey looks at trends based on a large number of loan applications, so it’s a pretty good picture of what is happening across the industry.
According to the latest report, average mortgage rates for FHA loans in Washington and across the nation were lower than those assigned to conventional home 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.
According to the November 8th MBA survey:
- The average interest rate assigned to 30-year fixed-rate conventional loans with conforming balances dipped slightly to 4.18%.
- By comparison, the average rate assigned to a 30-year fixed-rate FHA loan fell to 4.05% during the same week.
So that answers a common question among borrowers: Do Washington FHA loans offer lower mortgage rates than conventional? In many cases, they do. The survey cited above, and many like it, have shown that the average mortgage rates for FHA loans are often lower 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
While FHA home loans in Washington may offer lower rates (on average), the “standard” conventional mortgage loan is still the most popular financing option among borrowers these days.
Related: Loan options for first-time buyers
The MBA report mentioned above also showed that “the FHA share of total applications increased to 10.6% from 10.4% the week prior.” This means that Federal Housing Administration loans are a relatively small slice of the overall mortgage market.
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).
Disclaimer: This article includes average FHA and conventional rates for the first week of November 2017. 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.