Borrowers Are Turning to FHA Loans and ARMs as Mortgage Rates Stay Stuck

Borrowers Are Turning to FHA Loans and ARMs as Mortgage Rates Stay Stuck

Mortgage rates have been holding steady so far in 2026, and while that might sound like good news, it’s also causing many buyers to rethink how they finance their homes.

According to new survey data from the Mortgage Bankers Association, mortgage applications dipped for the second week in a row as many borrowers wait to see if rates will drop further.

Mortgage Demand Slows Down

For the week ending February 6:

• Total mortgage applications fell by 0.3%
• Purchase applications dropped 2%
• Refinance activity rose only slightly, up 1%
  
  

After a strong start to the year, the market is beginning to cool as buyers face continued affordability challenges.

Why Buyers Are Looking at FHA Loans

One major trend emerging is the growing use of FHA loans, which made up 18.4% of all mortgage applications last week.

FHA loans are becoming more popular because they often offer:

• Lower down payment requirements
• Easier qualification guidelines
• Lower interest rates compared to conventional loans
  
  

For example, recent rate comparisons show:

• 30-year fixed conventional mortgage: 6.11%
• 30-year FHA loan: 5.69%
  
  

That difference can make a big impact on monthly payments, especially for first-time buyers.

Adjustable-Rate Mortgages Are Also Making a Comeback

Another option borrowers are exploring is the adjustable-rate mortgage (ARM). ARM applications rose to 8%, reaching a seven-week high.

ARMs typically offer:

• Lower introductory rates
• Fixed pricing for the first 5–7 years
• Potential savings in the short term
  
  

However, because rates can change after the initial period, ARMs may not be the best fit for everyone.

What This Means for Today’s Buyers

With mortgage rates stuck in a narrow range, many buyers are adjusting their strategies rather than putting their plans on hold.

Exploring alternative loan options like FHA loans or ARMs can help make homeownership more affordable, but it’s important to choose the right product based on your long-term goals.

Need Help Navigating Your Mortgage Options?

If you’re thinking about buying this year and wondering what loan type makes the most sense for your situation, I’d be happy to connect you with trusted local lenders and walk you through your options.

Have questions about what you could qualify for in today’s market?