Quick Look: The Best FHA Lenders in Missouri
- Best for Bank Statement Loans: Angel Oak Mortgage Solutions
- Best for a Variety of Options: New American Funding
- Best for Online Loans: Quicken Loans®
- Best for Low Credit Scores: Guild Mortgage
- Best for Simple Application Process: SunTrust
- Best Service: US Bank
You might be wondering how to buy a home in the Show-Me State without a 20% down payment. An FHA loan in Missouri might help you be able to buy a home sooner than you think. Here’s how to find out whether an FHA loan is right for you.
6 Best Lenders for FHA Loans in Missouri
We’ve rounded up the 5 best mortgage companies in Missouri for an FHA loan.
1. Best for Bank Statement Loans: Angel Oak Mortgage Solutions
- Best For:Flexible Mortgage Optionssecurely through Angel Oak Mortgage Solutions's website
Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio Non-QM mortgage loans. Angel Oak is licensed in 45 states and offers competitive rates and quick closing times.
- Available for purchase, cash-out or rate-term refinance
- Primary, second home, or investment properties
- Single family, townhomes, or condos
- Loan amounts up to $3.5 million
- No tax return options for self-employed borrowers and real estate investors
- 1099 income options available
- Government loan products available (FHA, USDA, VA)
- Competitive rates on conventional purchase and refinance
- Flexible down payment options
- Non-warrantable condos allowed
2. Best for a Variety of Options: New American Funding
An FHA loan is ideal for those who have less than perfect credit or no credit history. You'll have the option of 30 year fixed or 15 year fixed loans with a low down payment option. To qualify for an FHA loan though New American Funding you'll need a credit score of 580 or higher, 3.5% - 10% down depending on credit score and proof of steady income. Along with that, mortgage insurance is required, there are higher home inspection standards and the loan will have to be used for a primary, residential property.
New American Funding has a A+ rating with the BBB and over 236k reviews. There's something to be said about reputation and borrower satisfaction when it comes to New American Funding. Apply today for an FHA loan.
3. Best for Online Loans: Quicken Loans®
Quicken Loans® makes navigating the mortgage process easy. It offers an intuitive, appealing website with clear links to its current mortgage rates. You can apply online and talk anytime to a loan officer via chat or phone.
Quicken Loans® offers stellar customer service throughout the application process and after. It offers FHA mortgages, conventional mortgages, proprietary mortgage products and VA loans.
4. Best for Low Credit Scores: Guild Mortgage
Guild Mortgage offers multiple options for borrowers with less-than-perfect credit. It offers a proprietary mortgage with flexible requirements as well as FHA mortgages, VA mortgages, USDA mortgages, conventional mortgages and other options.
Guild Mortgage has branches throughout the state and an impressive website with mortgage calculators to explore.
5. Best for Simple Application Process: SunTrust
SunTrust offers an online application that walks you through the process. It also guides you to the questions that are relevant to you and your situation.
You can even complete it on your phone. SunTrust offers conventional, FHA and VA mortgages.
6. Best for Service: US Bank
U.S. Bank has branches throughout Missouri so it’s easy to work with a loan officer in person.
U.S. Bank has a reputation for outstanding service and offers online prequalification and an online application. U.S. Bank offers conventional, FHA and VA mortgages.
What is an FHA Loan?
The Federal Housing Administration, which is under the jurisdiction of Housing and Urban Development (HUD), oversees and guarantees FHA loans. These mortgages are for first time home buyers or for those who have a low minimum down payment requirement and lower minimum credit score limits. Closing costs can be rolled into your loan. You do have to pay mortgage insurance with an FHA loan.
Requirements for an FHA Loan
FHA loans have flexible requirements compared to other types of home loans. Here’s what you need to know.
- Credit scores: The FHA has low minimum score requirements. Borrowers with a credit score as low as 500 can qualify under FHA standards. Keep in mind that lenders may have higher credit requirements. The FHA allows 500 credit scores but many lenders require a credit score of 620 or higher. The best approach is to contact multiple FHA lenders for a quote.
- Down payment: The FHA allows borrowers with a credit score of 580 or higher to make a down payment of as little as 3.5%. If your credit score is 500–579, you must make at least a 10% down payment.
- Debt-to-income: The FHA requires lenders to look at your monthly debt payments and compare that total to your pre-tax income. This is called your debt-to-income ratio. In general, the FHA prefers a debt-to-income ratio of 43%. Your total debt payments should be 43% or less of your pre-tax income. For example, if you make $3,000 per month before taxes, your total debt payments should be $1,290 or less. There is a bit of wiggle room with this requirement if you have a significant amount in savings. Your debt payments could include:
- Student loans
- Car loans
- Minimum credit card payments
- Home price: FHA mortgages have a limit on how much you can spend. The limit varies depending on where you live. Most areas have a limit of $314,827. Some higher-cost areas are limited to $726,525.
Lender Specifics for FHA Loans
Curious about how to get a refinance or purchase quote? Private lenders offer FHA loans. Here are some quick facts among several lenders.
| Lender | Minimum Credit Score | Loan Servicing | Minimum Down Payment |
|---|---|---|---|
| Bank of America | 620 | In-house | Unspecified |
| PennyMac | 620 | In-house | 3.5% |
| Quicken Loans® | 620 | In-house | 3.5% |
| SunTrust | 620 | In-house | 3.5% |
| U.S. Bank | 620 | In-house | 3.5% |
Interest Rates for FHA
Lenders set the interest rates for FHA mortgages. Here are the 2 types of interest rates you’ll find when you get a purchase or refinance quote:
- Adjustable-rate: An adjustable-rate mortgage (ARM) has an interest rate that changes. The lender sets the schedule for changes before you agree to the mortgage. Lenders change rates based on what’s happening in the economy. ARMs typically start with a set interest rate. Let’s say you’re considering a 5/1 ARM. A 5/1 has a 5-year period with a set interest rate. After that, the interest rate changes once per year. This means your monthly mortgage payment could increase or decrease.
- Fixed-rate: A fixed-rate mortgage has the same interest rate for as long as you have the mortgage. This means your monthly payments are always the same as well.
Do You Need Mortgage Insurance?
You will also need to purchase mortgage insurance if you get an FHA mortgage. Mortgage insurance is insurance that protects the lender if a home goes into foreclosure. Your mortgage insurance premium (MIP) is automatically added to your mortgage. It’s a part of your monthly payment and a part of your closing costs.
Borrowers pay for FHA mortgage insurance in 2 ways:
- Upfront premium: Borrowers pay 1.75% of the loan amount upfront as a mortgage insurance premium. This premium can be included in the amount you borrow.
- Annual premiums: The ongoing annual insurance premium amount varies depending on the size of your mortgage, the mortgage term and the size of your initial down payment. You pay the annual premium in monthly payments. Borrowers with a 15-year mortgage term or less pay 0.45%–0.95% annually. Borrowers with a mortgage term longer than 15 years pay 0.8%–1.05% annually.
How to Apply for an FHA Loan in Missouri
Ready to apply for a Missouri FHA loan? Here are the steps to get started:
- Check your credit. Checking your credit is a good first step in the application process. You can request a free copy of each credit report. Review each report carefully and look for errors and areas for improvement. If you see an error, contact the reporting company to get it corrected. Take these steps to boost your credit score. Even with an FHA mortgage, having the best credit score possible matters. A lender could offer you a lower interest rate or you could make a 3.5% down payment instead of a 10% down payment.
- Contact multiple lenders. Contact at least 3 lenders to get a quote. Review the quotes carefully and look at fees.
- Get a preapproval letter. Choose a lender and go through the preapproval process. Keep in mind that you can still choose a different lender when you make a final decision on your mortgage.
- Find a home. Shop for a home that meets the FHA price limits for your area and your budget.
- Make an offer. When you find the right home, make an offer. There might be some back-and-forth negotiating or the seller might decline the offer. You’ll eventually be able to find the perfect home at the right price.
- Apply for your loan. Decide which loan you want when your home seller accepts your offer. Complete the lender’s full application. You’ll also need to provide documentation, which may include:
- A copy of your driver’s license or state identification
- Name change documentation
- Bank statements from the past 2 months
- Pay stubs from the last month
- W-2s from the past 2 years
- Federal tax returns from the past 2 years
- Records indicating the source of your down payment
- Records of any other income
Choose the Best FHA Mortgage in Missouri
You might also want to look into Missouri’s assistance programs in addition to choosing a lender. For example, the Missouri Housing Development Commission offers cash assistance to qualified first time homebuyers to help with a down payment and closing costs. It also offers a low-interest mortgage to first time homebuyers who don’t need assistance.
Unsure about whether an FHA mortgage is right for you? You may want to talk with a housing counselor. Housing counselors provide advice on the mortgage process and can even advise you on the best mortgage for your situation.
Frequently Asked Questions
How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.
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