There are plenty of misconceptions about the FHA home loan program and first-time home buyers may assume some of them are true.
One such misconception is that the FHA home loan program is only for first-time home buyers. Another is that the FHA loan program offers perks for those who are searching for their first home or a starter home.
The reality is much different.
Three Things First-Time Home Buyers Should Know About FHA Loans
- FHA home loans are not need-based mortgages, though many who need affordable down payments and the ability to refinance later into a lower mortgage payment choose FHA mortgages for the flexible credit guidelines and other factors.
- Down payment assistance may be available in your local area. However, the FHA itself does not offer any such programs; you will need to ask your lender what options are extended to the first-time home buyer and whether any down payment assistance is available near you.
- FHA home loans do not have an income cap, and any financially qualified borrower may apply for an FHA loan whether you have owned a home before or if you are searching for your first house.
FHA Home Loan Facts You Should Remember
FHA down payments can be supplemented by a down payment gift from a family member, friend, or employer.
These funds must be properly sourced so make sure that your down payment gift is made with a check, deposited into your account, and the payment details are furnished to your lender who will then make sure the down payment has not been sourced from a cash advance, payday loan, or other non-approved sources.
FHA home loans typically have lower interest rates advertised. But the actual interest rate you will be offered on any home loan, FHA or not, will be determined based on your FICO scores, loan repayment history, and other financial qualifications.
FHA Home Loans Are Not Just For Existing Construction Or Typical Suburban Homes
You can apply for an FHA One-Time Close Construction mortgage to have a house built for you from the ground up. You are not limited to existing construction homes and you are also not limited by a certain type of home-you can purchase a condo unit with an FHA loan, a modular home, a manufactured home, etc.
Condo unit loans are made for condo projects on the FHA approved list, you can work with your lender to add a project that is not already on the FHA list. Some lenders may or may not offer condo loans, mobile home loans, etc. depending on demand and other factors.
You will need to check with the lender to see what kinds of loans are possible with that financial institution.