May 11, 2021

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The FHA Home Loan Myth

FHA Appraisal Refunds?

There is a prevailing myth about FHA home loans that persists to this very day–the idea that FHA mortgages are ONLY for first-time home buyers and/or the economically disadvantaged.

FHA home loans are thought to be exclusively for these borrowers, but that is definitely NOT TRUE. FHA home loans are for any financially qualified borrower with FICO scores over 500 (the FHA minimum, not your lender’s minimum standard).

Some confuse the FHA loan program with the USDA Single-Family home loan program, which DOES have income limits and is aimed at borrowers who are in financial need.

USDA mortgages have a no money down option for qualifying borrowers but the homes purchased with these mortgages must be in USDA-approved areas and feature household income caps.

FHA mortgages, on the other hand, do not have income restrictions.

There is no zero down payment option with FHA mortgages to purchase existing construction, but those who choose to build a home from the ground up using an FHA One-Time Close construction loan do have the option of skipping the down payment if they are using sufficient land equity for the transaction.

FHA down payments are comparatively low to some conventional mortgages–those who purchase with a conventional loan will find some scenarios where 10% or even 20% down is recommended.

FHA home loans are NOT restricted to first-time home buyers. You may find that if you require down payment assistance that many programs DO require their applicants to be either first-time home buyers OR that the applicant has not owned a home in the last three years.

The bottom line for FHA mortgages? No matter whether you want to build a home on your own lot, buy a mobile or manufactured home, or want to purchase a fixer-upper and remodel it, there is an FHA mortgage that can help.

Not all lenders offer FHA loans, you will need to search for a participating FHA lender who can work with you and your mortgage needs.

There is never any obligation when talking to a loan officer about your FHA home loan options. When talking to one for the first time, be sure to ask what the current interest rates and closing costs might be (estimates) for a mortgage on a home in your price range.

If you are not sure what you can afford when it comes to a new home loan, try using an online mortgage calculator to arrive at an estimate.

Mortgage calculators ask you for more information than just asking price and interest rate—you’ll need information about local property taxes and the term of your loan (15 or 30 years). It is never too early to begin planning your home loan–save and plan today so you can purchase your dream home when the time is right.

Joe Wallace - Staff Writer

By Joe Wallace

April 23, 2021

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 for (8) years and is currently the Associate Editor for

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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