There are a lot of myths out there about FHA Home Loans out there that are NOT correct. A lot of these myths are put out there by Realtors representing sellers (especially on banked owner REO’s) who really don’t understand FHA Loans.
Myth #1 FHA Loans Are Only for First Time Home Buyers:
Anyone can get a FHA Loan; you do NOT have to be a first time home buyer. But you can only have one FHA Loan at a time and you can only get an FHA Loan on a primary residence.
Myth #2 FHA Loans take more time processing:
FHA Loans do NOT take any more time to process than a conventional loan. There is nothing about them that would take them any more time to process than a conventional loan. You can close on your new house with a FHA Loan just as fast as or faster than if you were to get a conventional loan.
Myth #3 More paperwork is required
There is no more paperwork involved in a FHA Loan then a conventional loan. Both will require standard income, asset, property and credit documentation.
Myth #4 Interest Rates are Higher on FHA Loans
Interest rates on 30 year fixed FHA Loans are just as competitive as conventional loans, if not sometimes better. In fact FHA does not penalize borrowers for lower credit scores as much as conventional loans do.
Myth #5 FHA Loans Are Too Restrictive
The opposite is actually true! FHA Loans have more flexible credit and asset guidelines then conventional loans, (especially when a borrower is putting less than 20% down on a conventional loan). Also, FHA Loans also still allow the mortgage company to choose the appraiser. This means you are more likely to get an appraisal done by a local professional vs. conventional loans that require appraisals through the HVCC process which often assigns inexperienced out-of-area appraisers working for low wages.
Myth #6 FHA Loans Require Termite Clearance Reports
If the buyer does not ask for a pest inspection in the purchase contract, they will not be required to get a clearance for a FHA loan.
Myth #7 FHA Loans Have Low Limits on Maximum Loan Amounts
You can get an FHA Loan all the way up to $729,750 in many areas of the county. This is the same as the upper limit for conventional loans.
So there you have it. Seven Myths about FHA Loans that are not true! Please don’t hesitate to call if you have any questions.
Warm Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899 (direct)
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