SIX MYTHS ABOUT FHA LOANS
MYTH #1 - Only buyers with bad credit apply for FHA loans. TRUTH: While buyers with credit scores as low as 500 can apply for an FHA loan, borrowers with stellar credit scores may apply as well. The average credit score for FHA borrowers is 683, and 80% of them have a credit score of 600 or higher, according to 2024 data from Ellie Mae, a loan origination software company.
MYTH #2 - FHA loans are only for first-time home buyers. TRUTH: First-time buyers and low-to-moderate-income households often use these loans but FHA loans also can be used by repeat buyers.
MYTH #3 - FHA loans come with higher interest rates. TRUTH: FHA loans offer competitive interest rates - sometimes even better than conventional financing. Borrowers with high credit scores or high down payments tend to qualify for some of the best rates. Borrowers may want to explore both conventional and FHA loan options.
MYTH #4 - FHA loans take longer to close than conventional financing. TRUTH: FHA and conventional loans close in about the same amount of time - an average of 47 days according to 2024 data from Value Penguin, a personal finance resource.
MYTH #5 - FHA loans can be used only for single-family purchases. TRUTH: An FHA loan can be used to buy a single-family house, town-home, manufactured home or HUD-approved condo. Borrowers also can use FHA to purchase multifamily properties with up to four units, but must be used as primary residence.
MYTH #6 - FHA loans have income limits for applicants. TRUTH: FHA loans do not have any minimum or maximum income limits. Even high-earning households can apply.
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