April 20, 2023
Many people still have misconceptions about the FHA home loan program. They might think they “earn too much money” to be a successful applicant (not true, FHA home loans are not need-based loans) or would not qualify because they want to build a home instead of buying an existing-construction house.
This is also not true; FHA loans include those for building a home instead of buying one. They are called One-Time Close construction loans, and feature the same FHA FICO score and down payment requirements as other FHA mortgage options.
What are the facts about FHA home loans you need to know to make a better-informed decision about your loan choices?
FHA Loan Fact: FHA Mortgages Are For Any Financially Qualified Borrower
Unlike the USDA home loan program, which DOES feature need-based mortgages to those who fall under the income guidelines for that loan program, FHA mortgages do NOT have income limits or restrictions on purchase price except for the usual FHA loan limits that apply per county.
FHA Loan Fact: FHA Loans Can Be Used To Buy Condos, Mobile Homes, And More
An FHA mortgage lets you buy real property taxable as real estate. That means your desire for a condo unit, townhome, mobile home or manufactured home can be met using an FHA mortgage.
Things that cannot be classified as real estate such as RVs or houseboats cannot qualify for an FHA mortgage.
FHA Loan Fact: Lower FICO Scores May Qualify
FHA loan standards allow those with FICO scores starting at 580 or higher to qualify for maximum financing. Your lender may have standards above and beyond this–they are permitted to–so it pays to shop around for a lender.
Remember, FHA mortgages are backed by the government so there is less risk to the lender. That is why you may qualify even with lower credit scores.
FHA Loan Fact: You Can Buy A Home With As Many As Four Living Units
Did you know an FHA loan can be approved for a property with as many as four units? That lets you become a landlord if you so desire, renting out the units you aren’t using yourself.
FHA loans are for owner/occupiers so you should not count on being able to use an FHA mortgage to purchase a house you don’t intend to live in as your primary address.
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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