Feb 3. (FreeRateUpdate.com) – FHA mortgage rates are unbelievably low. It’s recent guideline changes though as well as increases in premiums that have caught all the headlines. FHA loans now account for about 1/3 of new mortgages. FHA 30 year fixed rates are as low as 4.75% at par. Par rates are the 
lowest available interest rates that do not include a buy down, also known as discount points.
NEW: Looking for the lowest FHA loan rates? Search local FHA mortgage rates.
Why then doesn’t everybody get an FHA loans. One word, fees. FHA recently raised premiums over 2%. PMI, paid by the borrower helps to insure these higher risk loans and as defaults have risen so have fees. Pressure from the government for FHA to keep an abundance of cash on one reason for FHA’s recent premium increase. Another is rising defaults. Because FHA borrowers are generally more risky than Fannie and Freddie insured borrowers the default rates on these loans are naturally higher. All this being said an up to $8,000 government tax credit sure helps. The great thing about this tax credit, it’s applicable to closing fees which are generally paid out of pocket on purchase loans. Some companies, such as Wells Fargo, offer their FHA mortgages at higher rates so that borrowers can absorb some of the fees into the interest rate, saving their cash for the down payment.
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