March 8, 2022
There are a lot of myths that are still circulating about FHA home loans. What do you need to know about these loans to separate the facts from the fiction?
True Or False? FHA Home Loans Are For New Buyers Only
False. Some people mistakenly believe you can only qualify for a mortgage guaranteed by the FHA if you are a first-time homebuyer. This is not true. You must financially qualify for the loan like any other mortgage program but you do not have to be buying a house for the first time.
True Or False? FHA Loans Require Mortgage Insurance
True. FHA mortgages issued today have mortgage insurance requirements for either 11 years or the full duration of the loan depending on how much you put down, the term of the mortgage, and other factors.
True Or False? FHA Loans Require Down Payments
True. Some confuse FHA mortgages with certain USDA loan programs which may offer zero down for certain applicants who meet income restrictions and other guidelines.
True Or False? FHA Home Loans Can Be Issued For Foreclosed Homes
True. FHA mortgages include an option to buy a fixer-upper (which a foreclosure is likely to be) using an FHA 203(k) Rehabilitation Mortgage.
These loans can purchase and renovate a home like a foreclosure, but you’ll be required to bring the property up to minimum standards and meet state/local building code requirements.
True Or False: I Can Use An FHA Loan To Buy A Home With A Well
The short answer is that it depends. FHA loan rules state that homes that are to be purchased with an FHA mortgage should be connected to the local utility providers whenever feasible.
Not all homes are able to be connected to the local providers; in such cases, a well must meet local health standards–the FHA defers to the local authority in these cases. Lender requirements may also apply.
True Or False: FHA Home Loans Can Be Used To Buy Manufactured Homes
True. The manufactured home must be at least 400 square feet (total floor area) and it must be manufactured after Jun 15, 1976, to qualify. Manufactured homes must be placed on a permanent foundation as a condition of loan approval.
True Or False: I Can Get Cash Back At Closing Time With An FHA Mortgage
True, with conditions. In general the only cash back you can get with an FHA purchase loan at closing time is in the form of refunds for things you paid upfront for but later financed into the loan.
The only way to get unrestricted cash back at closing time with an FHA loan using the loan balance as the source of funds is to apply for an FHA Cash-Out Refinance loan.
Talk to a lender about any of these options to learn what the latest opportunities might be to buy a home with an FHA loan.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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