why is the apr higher on fha loans

Best answer


FHA loan requires annual mortgage insurance

People also ask


  • Why is my FHA loan APR so high?

  • Annual percentage rate (APR) measures the total cost of your loan each year, including mortgage interest and other loan costs spread across the loan term. Because FHA loans have high loan costs in the shape of mortgage insurance premiums, their APRs tend to be higher than other loan types.

  • Why is my APR higher than my interest rate?

  • On a fixed鈥搑ate mortgage, the APR will almost always be higher than the interest rate. That鈥檚 because your rate stays the same over the life of the loan 鈥?so adding fees on top of the fixed rate will naturally increase the APR.

  • What is APR and why is it important for your mortgage?

  • Some experts say APR is most important because it includes your interest rate and your loan fees. It鈥檚 the 鈥榬eal鈥?cost of a mortgage. But APR is often too broad to be a good comparison tool. Today鈥檚 mortgage shoppers have a lot of flexibility to choose their interest rates and upfront fees.

  • What is the Annual Percentage Rate (APR)?

  • The annual percentage rate is the cost of borrowing money from the lender, shown as a percentage of your mortgage amount. The APR includes the interest rate as well as all other fees that are paid over the life of the loan.

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