FHA Home Loan Myths in 2022
FHA home loans do not require you to be a first-time buyer but some downpayment assistance programs may; it is important not to confuse the two.
FHA home loan myths include the notion that FHA mortgages are only for those in the low-to-moderate income range and the idea that you can “earn too much” to qualify. People sometimes confuse FHA mortgage rules with the details of the need-based USDA home loan programs which are also backed by government guarantees.
Here are some other FHA home loan myths you should be aware of:
FHA Mortgages and Down Payment Assistance
FHA home loans DO permit down payment assistance as long as it comes from approved sources and does not come from the seller or other third parties with a financial stake in the outcome of the transaction.
However, for FHA One-Time Close construction mortgages, you may find that participating lenders do not permit down payment help for those loans.
That is something to keep in mind when choosing your loan options. The lender is free to have higher qualifying requirements for FHA loans than the FHA’s bare minimums and your lender may reserve the option of down payment assistance for FHA mortgages not requiring construction.
FHA Loans, Mortgage Insurance Requirements, and Conventional Mortgages
Many applying for FHA loans want to know when they can cancel their mortgage insurance. In typical cases, it’s possible to cancel mortgage insurance on a conventional loan once you have paid off 20% of your mortgage.
But FHA loans typically require mortgage insurance for either 11 years or the lifetime of the mortgage depending on variables such as your loan term, the amount of your down payment, etc.
FHA Condo Loans
In decades past, the FHA required all condos purchased with an FHA mortgage to be on or added to the FHA “approved” list for condo projects. But now, you may qualify for an FHA mortgage for a condo unit that is given “single unit” approval in a project that is not otherwise approved by the FHA. Ask your lender about this option should you anticipate needing it.
Learn About the Path to Homeownership
Take the guesswork out of buying and owning a home. Once you know where you want to go, we'll get you there in 9 steps.
Step 1: How Much Can You Afford?
Step 2: Know Your Homebuyer Rights
Step 3: Basic Mortgage Terminology
Step 4: Shopping for a Mortgage
Step 5: Shopping for Your Home
Step 6: Making an Offer to the Seller
Step 7: Getting a Home Inspection
Step 8: Homeowner's Insurance
Step 9: What to Expect at Closing
Do you know what's on your credit report?
Learn what your score means.