Anything bad about a FHA home Loan?

Looking to purchase a home with as little money as possible down. It will be under 200K, and in an area considered depreciating so 100% financing is out of the question. Is there anything bad about a FHA loan? If i wanted to sell the house or do a home equity loan would this constrict my options?

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  • 1 decade ago
    Best Answer

    FHA loans are really great loans. As little as 3% down, sellers can pay up to 6% of your closing costs and prepaids, the strict criteria for the property, no post closing reserve requirements and no minimum credit scores are designed to help first timers. The downfall is the processing time and the documentation requirements. The processing time can be 30-60days and her is the basic document requirement: 30days worth of paystubs, most recent 2 years W2's, most recent 2 months of bank statements (supporting sufficient funds to close the tranaction and documenting any large deposits other than your payroll) legible copies of photo id, a complete 2 year residence and employment history that can be verified. Although there s no min credit score, you will need to demonstrate an ability and willingness to pay your bills timely. The use of non-traditional credit is allowed (thats credit that does appear on a credit report) and landlord contact information to verify housing payments are made timely. You can sell or obtain a second without any additional restrictions that are not common to all mortgage loans. There is no prepayment penalty. Loans are insured by HUD.

    Food for thought, good luck!

    Source(s): www.hud.gov www.wellsfargo.com FHA DE Underwriter and credit analyst since 1979
  • Anonymous
    5 years ago

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    RE Anything bad about a FHA home Loan?

    Looking to purchase a home with as little money as possible down. It will be under 200K, and in an area considered depreciating so 100% financing is out of the question. Is there anything bad about a FHA loan? If i wanted to sell the house or do a home equity loan would this constrict my options?

  • 3 years ago

    Fha Loan Good Or Bad

  • 1 decade ago

    I've been processing conventional loans for 6 years, and I just started doing FHA this year. So far I see nothing but good things about FHA loans. The only downside is that there is a little more paperwork, and it requires an inspection, not just an appraisal. Overall, the positives outnumber the negatives.

    Source(s): Loan Officer
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  • 1 decade ago

    There is nothing wrong with a FHA loan. It is essentially the same as a conventional mortgage, except you have to pay an upfront mortgage insurance premium, which is equal to 1.5% of your loan. This amount will be added to the loan amount, so you will not have to bring that amount to closing. There are other factors to the loan, and if you would like to discuss them, please call me and I would be glad to help! 616-285-7787.

    Source(s): Mortgage Experience
  • 1 decade ago

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    3 years ago

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  • 3 years ago

    Perhaps, but I'm not 100% on it

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