Is FHA Dead Now That the Mortgage Insurance is For Life?

FHA is alive and kicking!  We are going to continue to see plenty of FHA buyers, and it is still a good loan.  Although the mortgage insurance stays on for the life of the loan (or 11 years with 10% down), most do not keep a loan for the full 30 years.  Many times these homes are starter homes.  Buyers outgrow them, and then use the equity gain as a down payment on their next home.

There are so many great advantages that can help homebuyers: FHA loans are assumable, they allow much higher debt to income ratios for qualifying, they allow all gift funds, up to 6% in seller contributions rather than 3%, credit scores down to 580 with 3.5% down, and down to as low as 500 with 10% down!  Plus with a good payment history, the client can always try to get the mortgage insurance removed sooner!