Many buyers are being approved for FHA loans. It leaves a lot of you asking, “What is this?” Many others are not applying because they say “I already have/had a FHA loan” or “I am not a first time home buyer.” What does this new era of FHA loans mean?
It means the days of the “dreaded” FHA loans are over! FHA loans are loans that are backed by the government. The Federal Housing Administration (FHA) has taken notice and now they are easier to get, have higher loan limits and are faster to process.
If you have already had an FHA loan, THAT IS OK! You can have however many FHA loans you want, but only one at a time. You cannot use FHA loans for investment properties, they are meant for owner occupied properties. They are NOT for first time buyers only. You can be on your 5th home and still have an FHA loan.
The bottom line. FHA loans are a great tool. A gift from the government. They are not low income loans, first time buyer loans, or bad credit loans. Nothing like that! They are a way for a buyer to buy a home for themselves to live in with a low down payment. Only 3% down and seller contributions for closing costs are allowed. This is an easy way to get into your own home with very little out of pocket, and for many borrowers, this is the only way to get a loan now that Conventional loans have stricter guidelines and higher down payments. Check with your Realtor® or Mortgage Lender and see if the FHA loan will benefit you. The old ways of not being able to get many homes approved, low loan limits or 60 days to close are over. Check it out and see if it is the loan for you. Keep in mind, 35-45 days to close are still the norm and homes still have to pass certain inspections! But that is ok, because whatever you have to go through to get your loan, it is all worth it in the end!