FHA Loans: Busting the Myths That Keep Buyers (and Sellers) From Saying “Yes”

FHA Loans: Busting the Myths That Keep Buyers (and Sellers) From Saying “Yes”

In today’s housing market, where prices are stretching buyers’ budgets, FHA loans are making a comeback. And for good reason—these government-backed mortgages offer flexible borrower requirements, low down payments (as little as 3–5%), and a chance at homeownership for people who might not otherwise get the keys to their dream home.

Yet despite all the perks, FHA loans still get a bad rap. Some sellers—and even a few agents—hesitate when they see “FHA” on an offer, assuming it means a slower, riskier, or more complicated transaction. But here’s the truth: when you’ve got the right lender and a real estate agent who knows the FHA playbook, these loans can close just as seamlessly as any conventional mortgage.

So let’s set the record straight and clear up the biggest FHA loan myths floating around the real estate world.

Myth #1: FHA loans are only for buyers with bad credit.

The truth: FHA loans are designed to be flexible, but that doesn’t mean every FHA borrower is scraping by with a low score. In fact, the average FHA borrower has a credit score of 683. And according to 2024 Ellie Mae data, 80% of FHA buyers score 600 or higher. That’s hardly “bad credit.”

Myth #2: FHA loans are only for first-time buyers.

The truth: While FHA loans are popular with first-time buyers (and understandably so), they’re open to any qualified buyer—whether it’s your first home, your third, or your tenth.

Myth #3: FHA loans mean higher interest rates.

The truth: FHA loans often have interest rates that are just as competitive as conventional loans—sometimes even lower. Buyers with strong credit and larger down payments can score some of the best rates on the market. The smart move? Compare both FHA and conventional options before deciding.

Myth #4: FHA loans take longer to close.

The truth: Nope. On average, FHA and conventional loans both close in about 47 days. Any delays are usually tied to the process, not the product.

Myth #5: FHA loans only work for single-family homes.

The truth: FHA financing is more versatile than you think. You can use it for single-family homes, townhomes, HUD-approved condos, manufactured homes, and even multifamily properties up to four units (as long as you live in one).

Myth #6: FHA loans have income limits.

The truth: There are no income restrictions for FHA loans. Whether you’re earning a modest paycheck or a six-figure salary, you can still qualify.

Why This Matters for Buyers AND Sellers

For buyers, knowing the facts about FHA loans opens the door to more opportunities. For sellers, understanding them means more offers to consider—and potentially faster, smoother closings.

The real key? Partnering with a knowledgeable buyer’s agent and a lender who specializes in FHA financing. They’ll know the ins and outs of the program, handle any extra paperwork with ease, and keep the deal moving forward without a hitch.

So, before you write off an FHA loan—or an offer that’s using one—remember: these loans aren’t just “acceptable,” they can be an excellent path to a successful sale.

Thinking about buying with FHA financing? Or selling to an FHA buyer?
Let’s connect you with our trusted FHA mortgage specialist who can walk you through the process and show you just how smooth an FHA transaction can be.