Why Your Realtor Is Wrong About FHA Loans

Have you heard?

❌ "FHA loans make your offer less competitive"
❌ "Sellers don't like FHA buyers"
❌ "The mortgage insurance is too expensive"
❌ "You'll pay more in the long run"

❌ Myth #1: "FHA Offers Are Always Rejected"

What Realtors/Sellers Say:

"Sellers won't accept FHA offers because they're too risky and take longer to close."

The Reality:

  • FHA is more flexible than Conventional (so many people are borderline approved on Conventional)
  • FHA closes in exactly the same amount of time as Conventional
  • Market conditions matter more: In buyer's markets, FHA offers are readily accepted

💰 Myth #2: "Mortgage Insurance Is Too Expensive"

What Realtors Commonly Say:

"With FHA loans, you're stuck paying mortgage insurance forever, unlike conventional loans where you can remove PMI."

The Truth About FHA Mortgage Insurance:

How It Actually Works:

  • Down payment ≥ 10%: MIP automatically cancels after 11 years
  • Down payment < 10%: MIP remains for the life of the loan
    • It decreases every year!
    • Eg. $450k purchase price 3.5% down FHA
      • MIP life of loan → $71,280 vs $46,865
  • FHA MI is often less monthly and gives you a lower rate than Conventional
    • $450k purchase 3.5% down
      • ㅤ
      Conventional
      FHA
      MI Rate
      0.60%
      0.55%
      MI Actual
      $218/mo
      $198/mo

What They Don’t Tell You

  1. You can always refi to a conventional with no MI when you have enough equity
  1. FHA rates are often lower than conventional, offsetting some MIP costs (especially up front)
  1. Getting approved for FHA might be your only path to homeownership now to build equity (bridge)
🏡
Ready to get pre-approved with FHA experts? Get pre-approved at https://www.winthehouseyoulove.com/

🔍 Myth #3: "FHA Appraisal Inspections Kill Deals"

The Misconception:

"FHA appraisals are too strict and will find problems that kill the sale."

The Reality:

  • FHA doesn’t impact the value of the home (i.e. FHA appraisals don’t come in lower than Conventional)
  • FHA is more strict than Conventional, but that doesn’t mean it’s impossible to pass
  • FHA appraisals ensure the home is safe and habitable
  • These are protections for YOU as the buyer
  • Most issues found are minor and easily fixed

FHA Common Issues

  • No exposed wiring
  • Handrails required if safety risk
  • Floor covering required (no tripping hazard)
  • Appliances fully operational
  • Attic access required
  • Homes built before 1978 — no chipped or peeling paint
  • Built after 1978 — exterior defective paint exposing subsurface needs repaired
  • Broken glass must be replaced
  • 2 years life remaining on roof
  • Email me for a full checklist BEFORE you write an offer kyle@winthehouseyoulove.com

💡 The Real Reasons Some Realtors Discourage FHA

  • They don’t understand FHA — agents are NOT lenders
  • They use anecdotes from other agents deal’s to influencer yours

📈 Making Your FHA Offer Competitive

What should influence your choice of loan
  • What you qualify for
  • Your financial goals
  • The market temperature

Strategies That Work:

  1. Strong pre-approval letter w/ potential full underwrite for quick close
  1. Strong terms
      • Quick closing timeline
      • Competitive price
      • Minimal contingencies where appropriate
      • Appraisal gap coverage (if you want)