FHA Loans: Fact vs. Fiction
March 10, 2015
Myths abound concerning FHA home loans and refinance loans. Newcomers and those who have never applied for an FHA home loan before sometimes misunderstand the process or key parts of this important loan program. Understanding the basic facts can help you better understand what an FHA home loan has to offer you compared to conventional mortgage loans.
Fact: FHA loans are not limited to first-time home buyers.
FHA loans and refinance loans don’t give the borrower any benefits, advantages or disadvantages to a loan applicant based on your status as a first-time home buyer or first-time FHA borrower new to the program. All qualified borrowers are eligible for the same types of FHA loan programs. Your interest rate and other terms may vary depending on your financial qualifications.
Fact: FHA loans do not feature an income limit.
There is a misconception among some that FHA home loans are intended specifically for financially disadvantaged borrowers. This is not true. What is true is that FHA loans have interest rates that are more competitive than conventional lenders, and FHA loans in general terms require lower required down payments. However, there is no maximum income limit with these loans. As long as you qualify with good credit scores and your debt to income ratio, you may be approved for an FHA mortgage.
Fact: You can refinance a conventional mortgage into an FHA loan.
FHA home loans are commonly used to refinance from conventional mortgage loans into FHA mortgages. FHA refinancing may also be used to refinance out of adjustable rate loans and into fixed rate mortgages--an important advantage when you need to get a loan with a more predictable house payment.
Fact: You don’t need to stay with your original lender.
FHA refinance loans are available from any participating FHA lender willing to issue such loans; you do not need to refinance your home loan with your current lender if you don’t want to.
Speak to a loan officer to learn more about these facts and what your options might be under the FHA home loan program, including cash-out refinancing, energy efficient mortgages, and much more.
Fact: FHA loans are not limited to first-time home buyers.
FHA loans and refinance loans don’t give the borrower any benefits, advantages or disadvantages to a loan applicant based on your status as a first-time home buyer or first-time FHA borrower new to the program. All qualified borrowers are eligible for the same types of FHA loan programs. Your interest rate and other terms may vary depending on your financial qualifications.
Fact: FHA loans do not feature an income limit.
There is a misconception among some that FHA home loans are intended specifically for financially disadvantaged borrowers. This is not true. What is true is that FHA loans have interest rates that are more competitive than conventional lenders, and FHA loans in general terms require lower required down payments. However, there is no maximum income limit with these loans. As long as you qualify with good credit scores and your debt to income ratio, you may be approved for an FHA mortgage.
Fact: You can refinance a conventional mortgage into an FHA loan.
FHA home loans are commonly used to refinance from conventional mortgage loans into FHA mortgages. FHA refinancing may also be used to refinance out of adjustable rate loans and into fixed rate mortgages--an important advantage when you need to get a loan with a more predictable house payment.
Fact: You don’t need to stay with your original lender.
FHA refinance loans are available from any participating FHA lender willing to issue such loans; you do not need to refinance your home loan with your current lender if you don’t want to.
Speak to a loan officer to learn more about these facts and what your options might be under the FHA home loan program, including cash-out refinancing, energy efficient mortgages, and much more.
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