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10 Myths about FHA Loans

February 28th, 2011

There is a lot of false information going around about FHA loans, so we wanted to dispel some of the myths about the FHA loan program.

FHA lending has become an extremely popular choice for financing so it is important that you have the full understanding of FHA mortgages and the power of this government finance option. Today’s FHA rates fell to record levels recently and most mortgage companies have started to offer home loans insured by the FHA as they are truly one of the best government initiatives in our country’s history.

 

FHA Mortgage Loans Have developed a strong reputation over the last 77 years.

Below we listed 10 common myths about FHA loans.

  1.  You do not have to have a government job to qualify for a FHA loan.
  2.  FHA does not stand for Fair Housing Association.
  3.  FHA mortgages are not just for first time home buyers.
  4.  Mortgage insurance is not required with FHA loans on 15–yr terms below 90% LTV.
  5.  FHA does not have a minimum credit score requirement, but many FHA lenders incorporate additional credit score guidelines.
  6.  No cash out is allowed on the FHA Streamline.
  7.  The Max CLTV on a FHA loan is 125%.
  8.  FHA does not allow cash out refinancing to 95%.
  9.  FHA does offer home rehabilitation loans to 115%
  10.  FHA will not approve a loan to borrowers who defaulted on federal government loans

With foreclosure rates and loan defaults rising, you can expect FHA to continue modifying the FHA mortgage products on a regular basis, so check back our blog and stay up to speed.

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