Mortgage Myth 2: FHA Loans Are Only for First-time Home Buyers

In this second installment of Aksarben Mortgage’s seven-part series on mortgage myths and facts Nick Zwiebel and John Major clarify what an FHA loan is and who benefits from this type of home loan.

“An FHA loan is only for first-time home buyers.” MYTH! 

FHA is not an acronym for “First-time Home Acquisition.” It stands for Federal Housing Administration, the government agency established in 1934 by President Franklin D. Roosevelt during the height of the Great Depression. Today, it falls under the auspices of HUD, or the U.S. Department of Housing and Urban Development.

What is an FHA loan? An FHA loan is a mortgage issued by an FHA-approved lender and insured by the FHA. It is designed for low and moderate income borrowers. As such, it requires a lower down payment and credit scores than most conventional loans. 

For these reasons it is often associated with first-time home buyers who are often in the early stages of their careers and thus do not have the financial freedom as those individuals who have been in the workforce longer. 

But it is not limited to first-time buyers. Those who have been homeowners many times over are eligible for FHA loans. Seniors over 62 can benefit from a reverse mortgage through the FHA. Homeowners seeking energy efficiency can apply for a FHA Energy-Efficient Mortgage. 

Bottom line: An FHA loan greatly benefits first-time buyers, but it is available to all borrowers. 

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.