FHA questions & answers

FHA Loan Questions

► Are FHA loans good?

FHA loans are very good! The down payment requirement on an FHA home loan is only 3.5% and the seller can pay a large percentage of the buyer’s closing costs. The FHA loan allows for down payment and closing cost gift money. FHA loans are a very good way to finance a home.

► Are FHA loans only for first time home buyers?

No. FHA home loans are available to non-first time home buyers and first time home buyers.

► Can FHA down payment be a gift?

The FHA permits the down payment to be "gifted" from eligible donors.

► Can FHA loans be refinanced?

The Federal Housing Administration does not place any restrictions on refinancing FHA loans. In fact, the FHA offers a great refinance program for homeowners who want to reduce their interest rate or term. Read more 

► Can the lender pay my closing costs?

Lenders may pay a borrower’s closing costs, and/or prepaid items by “premium pricing.” Closing costs paid in this manner do not need to be
included as part of the seller contribution limitation. SOURCE - FHA Underwriting Manual

► Can you refinance a FHA loan to a conventional loan?

FHA loans may be refinanced to a conventional loan without restriction.

► Can you remove pmi from an FHA loan?

Unfortunately, the FHA does not allow the pmi (mip) to be removed. It does not matter if you made a down payment of 20% or more or if you have paid down the mortgage by 20% or more. The pmi/mip cannot be removed.

► Can I buy foreclosure with FHA loan?

Home buyers can use an FHA loan to buy a foreclosure providing that the foreclosed home meets the FHA appraisal guidelines. If the foreclosure is a HUD home (an FHA foreclosure), the home must carry the "insurable" label. This means that the FHA will permit an FHA on the HUD home.

► Can the down payment on FHA be a gift?

Yes, provided that the donor(s) meet the FHA guidelines and will sign a gift letter.

► Do FHA loans require pmi?

All FHA loans require pmi (also known as mip - monthly mortgage insurance); and, the monthly FHA pmi cannot be removed regardless of down payment or mortgage balance reduction.

► Do FHA loans require mortgage insurance?

All FHA loans require an upfront mortgage insurance payment and a monthly pmi/mip monthly payment.

► Does FHA require termite inspection?

Termite (or pest) inspection is no longer required by the FHA unless there is evidence of active infestation or it is required by the state or local jurisdiction, is customary to the area, or at the lender’s discretion. Mortgagee Letter 2005-48. HID Questions & Answers

► Is there an FHA inspection?

The FHA does not require a home inspection, although, the FHA strongly encourages all home buyers to obtain a home inspection prior to closing. The FHA feels so strongly about home inspections that the lender will ask you to sign a form to inform you about the importance of a home inspection. For Your Protection: Get a Home Inspection.pdf