Debunking FHA Financing Myths

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Debunking FHA Financing Myths

Today we are joined once again by Matt Weaver of PMAC lending to talk about some common misconceptions people have about FHA loans. Matt is an expert in the field and we want to take this opportunity to have him debunk some of the rumors you may have heard about this type of financing. 

FHA financing is one of the most favorable kind of loan you can get. Credit score requirements aren't very high, and the debt to income ration allowances are greater. One myth about FHA financing is that properties fail inspections at a higher rate than other types of financing. This is simply not true. The only property challenges that FHA won't allow vs conventional financing are a missing A/C unit, water being turned off, or visible roofing issues. Anything else wrong with the property would also fail for conventional financing as well. 

Here are a couple frequent questions that Matt gets asked about FHA financing that he wanted to help clear up. 

Does the appraisal still attach to the house?
 Yes they do, but only if the new buyer is going for FHA financing. If a buyer couldn't purchase a home because they weren't qualified, that FHA appraisal is transferable to the next buyer, but only if they are also doing FHA financing. 

 Are there any hidden pitfalls for FHA financing?
 Absolutely not. It's a very liberal loan product. Conventional financing does have a few advantages, but in reality it is a lot more difficult to qualify for. Over 30% of home buyers with a lower down payment have debt ratios in excess of 45%, which FHA will allow but conventional financing will not. Currently for conventional loans with a 5% down payment, it tops out at 45%. FHA loans can top our as high as 56%.


If you are interested in financing or have any questions on the topic, give us a call. We will put you in contact with Matt to make sure you are in the best hands possible.