what are the downsides of getting an FHA loan

Now that monthly mortgage insurance (MI) is at .85% FHA is a great mortgage program. The only downside I can think of is if you're looking for a condo and the complex is not FHA approved. Other than that the program has the most lenient credit score requirements and offers the best interest rates on the market.www.fhahomeloanguarantee.com

The down side is that all FHA loans charge a 1.75% upfront mortgage insurance premium (which can be financed). Additionally, you will pay an annual premium divided into monthly installments and in most instances, this monthly mortgage insurance is there for the life of the loan.. the only way to remove it would be to pay off your loan or to refinance into a different loan product. Also, FHA has maximum loan amounts, and for most of the country, your limited to $271,050. Also, it might be difficult to obtain financing on condo projects since they must be FHA approved ahead of time.. Ideally, if you have good credit scores, your far better off going conventional financing.. the rate will be slightly higher, but there's no upfront MI, and the monthly MI can be canceled once you have paid for 2 years, and once you reach 20% equity.. and you wont have to refinance to get it removed.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

I agree with William, FHA is relatively expensive due to the upfront mortgage insurance and because the monthly PMI never drops off the loan - regardless of how much you've paid off. Still, it is often a better option for borrowers who don't have strong credit or who need FHA flexibiility for debt ratio's and credit issues. You don't need to decide on your own what mortgage option is best for you - select an experienced and knowledgable mortgage lender who will evaluate options and make a recommendation to you.

I to agree with William. However, if you happened to be a bit credit challenged FHA can be more forgiving. Conventional financing rates generally are more credit sensitive than FHA, meaning the lower the credit score the higher the rate. I am the Branch Manager with Guaranteed Rate here in Indianapolis, IN. If you would like to discuss your situation please give me a call. @ 317-225-4868http://www.indianapolismortgageguy.com/https://www.guaranteedrate.com/eldenlewis

Depending on your situation the major down side to FHA is that the mortgage insurance is on the loan for the life of the loan. So depending on how long you plan to keep the property paying a little higher interest rate for conventional financing might make more sense

The biggest downside is the 1.75% up front mortgage insurance that is added to the loan balance at closing. In addition the fact that you have to pay monthly (annual) mortgage insurance for the life of the loan until you refinance out of it into a conventional loan. There are some upsides to an FHA loan too however. My suggestion is to contact a local loan officer/lender, share your info and have them present you with all of your available loan options so you can see what will best fit your needs. Best wishes, Sean