July 21, 2015
From time to time we get asked questions about FHA loans that reflect common misconceptions and myths about the program. Borrowers sometimes assume things about FHA single family home loans that aren’t true and it’s always a good idea to post some basic facts about the program from time to time to remind people what’s true and untrue about FHA mortgages.
FHA loans, for example, aren’t limited to people on fixed incomes, or to those who must demonstrate a need for a non-conventional loan. FHA mortgages are open to all qualified applicants. Your FICO scores, job history, debt-to-income ratio and other financial qualifications are what determine your ability to get an FHA loan. There is no such thing as earning “too much income” for an FHA loan.
There’s also no minimum income requirement–your eligibility for an FHA loan in this area has more to do with whether you can afford the loan along with your monthly financial obligations. Your lender will calculate your debt-to-income ratio to see whether you can afford the loan.
FHA home loans don’t offer any sort of advantage or penalty for being a first time home buyer. The same is true for those who have purchased before. You don’t need to be a first time home buyer to take advantage of an FHA mortgage, nor are you given any special treatment for being one.
FHA home loans are issued by participating lenders, not the government. You will need to apply through a participating FHA lender, the lender will process your paperwork and approve or deny the loan. The FHA does get involved directly in certain circumstances, but a typical FHA loan will have the borrower dealing directly with the lender or a broker.
FHA home loans are typically available for 15-year and 30-year terms. However, there are no penalties for early payoff–this is not permitted under the FHA loan program. Borrowers should feel free to pay more on their mortgage loans to speed up the payoff, and expect no penalties for doing so. Borrowers should not assume otherwise. The same goes for your right to freely sell your home once it’s been purchased with an FHA mortgage. Once you have moved into the home after closing and occupy the home as your primary residence, you cannot be restricted from selling the home as you see fit.
These are just a few of the basic misconceptions about FHA home loans–if you have questions about FHA mortgages, ask us in the comments section to get more information.
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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