What Finance Blogs Say About FHA Loans
April 2, 2024
There are lots of finance and mortgage-related publications. Some of these discuss FHA loan guidelines with varying degrees of accuracy. Here are some facts--and corrections--about FHA loans as published by others.
What Yahoo! Finance Says About FHA Loans
Yahoo Finance has a list of FHA loan pros and cons. One entry in the “pro” column says FHA mortgages feature lower credit score requirements than conventional loans (typically true), and no income limits are imposed. All true.
In the “cons” column, Yahoo! Finance says, “Loan limits can put some homes with higher purchase prices out of reach.” However, this blurb does not consider the FHA jumbo loan option, which allows qualifying borrowers to apply for an FHA loan above the county limit.
What Nerdwallet Says About FHA Loans
Nerdwallet notes, “To qualify for an FHA loan, the property must undergo an appraisal to ensure it meets government health and safety standards. An FHA appraisal is different and separate from a home inspection. Conventional loans don’t require this.”
It’s entirely likely that the article writer meant to write that conventional loans do not require the specific FHA appraisal process. Conventional mortgages DO require an appraisal to assess the property's fair market value.
But the conventional appraisal may differ from the FHA version. Why?
Consider what Open Mortgage says about FHA appraisals compared to conventional ones:
“Since an FHA loan comes with the protection of federal insurance, an FHA appraisal will go beyond just the property's market value. In addition to completing a traditional appraisal, FHA appraisers must verify that the home meets minimum standards for health and safety.”
What Credit Karma Says About FHA Loans
One Credit Karma article called "What Is An FHA Loan And How Does It Work" states, “If the home you want to buy needs some work, this program provides up to $35,000 — rolled into a mortgage for the purchase or refinance of a home — to rehabilitate it.”
But that description needs to be more accurate. The $35,000 cap on the renovations is for the “limited” version of the FHA 203(K) rehab mortgage.
If you want to apply for the “full” version, consider what HUD.gov says about that version of the FHA 203(k) program, which features a minimum but no specific dollar amount as the cap. Instead, “The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit for the area.”
There are plenty of articles about FHA mortgages and many online resources offering information with varying degrees of accuracy.
But you may need to speak to a participating lender to get a more accurate picture of what’s possible with an FHA mortgage.
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RELATED VIDEOS:
Measuring Your Loan-to-Value Ratio
Monitor Your Credit Score
FHA Programs for First-Time Homebuyers
What Yahoo! Finance Says About FHA Loans
Yahoo Finance has a list of FHA loan pros and cons. One entry in the “pro” column says FHA mortgages feature lower credit score requirements than conventional loans (typically true), and no income limits are imposed. All true.
In the “cons” column, Yahoo! Finance says, “Loan limits can put some homes with higher purchase prices out of reach.” However, this blurb does not consider the FHA jumbo loan option, which allows qualifying borrowers to apply for an FHA loan above the county limit.
What Nerdwallet Says About FHA Loans
Nerdwallet notes, “To qualify for an FHA loan, the property must undergo an appraisal to ensure it meets government health and safety standards. An FHA appraisal is different and separate from a home inspection. Conventional loans don’t require this.”
It’s entirely likely that the article writer meant to write that conventional loans do not require the specific FHA appraisal process. Conventional mortgages DO require an appraisal to assess the property's fair market value.
But the conventional appraisal may differ from the FHA version. Why?
Consider what Open Mortgage says about FHA appraisals compared to conventional ones:
“Since an FHA loan comes with the protection of federal insurance, an FHA appraisal will go beyond just the property's market value. In addition to completing a traditional appraisal, FHA appraisers must verify that the home meets minimum standards for health and safety.”
What Credit Karma Says About FHA Loans
One Credit Karma article called "What Is An FHA Loan And How Does It Work" states, “If the home you want to buy needs some work, this program provides up to $35,000 — rolled into a mortgage for the purchase or refinance of a home — to rehabilitate it.”
But that description needs to be more accurate. The $35,000 cap on the renovations is for the “limited” version of the FHA 203(K) rehab mortgage.
If you want to apply for the “full” version, consider what HUD.gov says about that version of the FHA 203(k) program, which features a minimum but no specific dollar amount as the cap. Instead, “The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit for the area.”
There are plenty of articles about FHA mortgages and many online resources offering information with varying degrees of accuracy.
But you may need to speak to a participating lender to get a more accurate picture of what’s possible with an FHA mortgage.
------------------------------
RELATED VIDEOS:
Measuring Your Loan-to-Value Ratio
Monitor Your Credit Score
FHA Programs for First-Time Homebuyers
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