Rates as low as 1.999%

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FHA loans are insured by the Federal Housing Administration and have lower barriers to entry than the typical mortgage.

Though you may need a credit score of 620 for a conventional home loan, you can be approved for an FHA loan with a score of just 500. And you might be able to make a down payment of only 3.5%.

UWM says the FHA loans through its Conquest loan program are available for both home purchases and refinances, and that rates start at 1.999%. Refi borrowers are eligible only if they haven't closed on a United Wholesale Mortgage loan in the last 18 months.

The company's super-low FHA rate follows a series of similar rollouts this year from the lending giant. In July, UWM offered 15-year fixed-rate mortgages with rates as low as 1.875%, and it's currently advertising 30-year conventional mortgages that can come with 1.999% rates.

How can UWM offer rates so deep in the basement? One reason is that it's a mortgage wholesaler: It doesn't offer loans directly to the public, but through mortgage brokers.

That allows the company to save on advertising and other overhead.

Is this mortgage for you?

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The fine print on UWM's super-cheap FHA loans says they come with "estimated finance charges of $5,700" — which likely includes "points."

Mortgages with extraordinarily low rates often require a borrower to pay the fees known as discount points as part of closing costs. One point typically costs 1% of the loan amount and lowers the mortgage rate by one-quarter of one percentage point, say from 2.75% to 2.50%.

UWM also says its FHA loan borrowers must pay mortgage insurance premiums, or MIPs. There's a one-time upfront MIP at closing, equal to 1.75% of the loan amount, followed by annual MIPs of 0.85%, paid in monthly installments.

All FHA loans have mortgage insurance premium requirements, to help defray the agency's costs. Because by backing these loans, the FHA promises to pay a lender if a borrower defaults.

The premiums never go away when you put down less than 10% to buy your home. If you make a down payment of 10% or more, you can shake off the annual MIPs after 11 years.

How to score an amazing mortgage rate

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Here's something else to know about the UWM's FHA loans: While rates start at 1.999%, they can be as high as 2.5%.

The lowest mortgage rates typically go to borrowers with better credit scores who are able to make larger down payments — say, 10% for an FHA loan.

If you'd like to give your credit score a nudge, you might use a debt consolidation loan to help pay down some of your credit card debt.

Generally, the most reliable way to land the best possible mortgage rate is by shopping around. Go online, gather rate quotes from at least five lenders and compare them.

Studies from Freddie Mac and LendingTree have found that comparison shopping works — and can save a borrower thousands, maybe even tens of thousands of dollars over time.

That strategy also works well when you buy or renew your homeowners insurance. Get quotes from multiple insurers, so you'll be certain get the right coverage at the lowest possible price.

The FHA's Loan Requirements Explained.

A walkthrough of how to meet the FHA's requirements.

See Guide

About the Author

Doug Whiteman

Doug Whiteman


Doug Whiteman is the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."

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