What are the advantages and disadvantages of getting a FHA loan?

Myth # 1: Conforming loan is the only way to go

Contrary to the popular mortgage wisdom, FHA loans, like any other loan product has its own advantages and disadvantages

Advantages:

-FHA allows a HIGH debt ratio (up to 60%)

-FHA gives you a LOW rate even if your scores are between 580–680

-FHA lets you put down as LITTLE as 3.5%

-FHA lets you qualify only one month after you start your working

Disadvantages:

-FHA has a mortgage insurance that likely will never go away, you will end refinancing or getting a new FHA and resetting MI (despite what Lender tells you)

-FHA’s monthly mortgage insurance is higher than conventional by 50%

-FHA has a bigger upfront cost due to the upfront mortgage insurance

-FHA requires a more expensive appraisal ( a few hundred more)

 

Myth #2: APR is how you should compare loans


Check out our free mortgage shopping tools at https://www.parlend.com

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