Question:
“What are the pros and cons of getting an FHA loan to buy a home?”
Answer:
The Pros:
- Low down payments
- More flexible qualifying
- Lower credit score requirements
The Cons:
- High up-front 1.75% mortgage insurance premium (MIP)
- High monthly 1.3% to 1.55% MIP
- Monthly MIP can never be removed if the loan is <10% down. If 10% down, it can be removed after 11 years.
- More stringent property condition requirements
- Some condo complexes are not “FHA approved”
Given the pros and cons, FHA loans are popular for people who would otherwise not qualify or are trying to conserve cash.
By the way, contrary to popular belief, FHA loans are not restricted to first-time homebuyers.
