What Are the Interest Rates for FHA 203(k) Loans?

Interest rates have a huge impact on the amount you pay over time. Two loans for the same amount, but with even slightly different interest rates, will result in dramatically different total payment amounts at the end of the loan term. There are also many factors that will affect the interest rate you’re offered. These include:

  • The national interest rate at the time of your loan

  • Your creditworthiness, including credit score and credit history

  • The amount you are able to put down on a home

  • The amount of the loan, including the amount necessary for renovations

Unfortunately, there is no way to determine exactly what interest rate a lender will offer you without going through the loan approval process. You may even find that the interest rate you’re initially offered at the beginning of the 203k application process is not what you receive at the end – it can vary in many instances.

In addition, different lenders have different interest rates for the various loans they offer. You will rarely find the same interest in the same loan from two different lenders, even if you are working with a national bank.

For instance, at the time of this writing, Wells Fargo offered the following interest rates:

  • 30-Year Fixed Rate: 4.875% Interest Rate 4.99% APR

  • 20-Year Fixed Rate: 4.750% Interest Rate 4.906 % APR

  • 15-Year Fixed Rate: 4.375% Interest Rate 4.553% APR

  • 5/1 ARM: 4.250% Interest Rate 4.979% APR

In comparison, US Bank’s offerings were as follows:

  • 30-Year Fixed Rate: 4.875% Interest Rate 4.951% APR

  • 20-Year Fixed Rate: 4.750% Interest Rate 4.852% APR

  • 15-Year Fixed Rate: 4.500% Interest Rate 4.629% APR

  • 5/1 ARM: 5.000% Interest Rate 4.764% APR

Even between two major lenders, there are obvious differences in the interest rate. Prepare for this going into the loan process by making yourself the least risky candidate possible and saving as much as you can for a down payment.