Pros and Cons of a FHA loan

[Fatima Champagne]

In a prior discussion, a number of BP members recommended that I start with a FHA loan. I plan to purchase a duplex or quad in the coming year, and originally thought to save 20% for a down payment. But a good deal of you responded and suggested that I opt for a FHA loan and put down 3.5%. While that all sounds fantastic I imagine that every options has its downsides. What are the negatives with going with a FHA loan? What are the positives?

( I am aware that FHA loans require the borrower to live on the property for at least a year, but seeing that I originally planned to do this anyway - this requirement wouldn't be an issue)

[Mindy Jensen]

@Fatima Champagne , something missing from this discussion is the slightly negative connotations of an FHA loan.

If you find yourself in a multiple offer situation and your FHA loan is up against a conventional loan and a cash offer, your offer may look less appealing. FHA has their own appraisers and an FHA appraisal sticks to the property for 4 months. A disappointing appraisal can't be changed by hiring a new appraiser like with a conventional loan.

As an agent, I look at the total offer - price minus any requested concessions, plus financing choice before sharing with my client, so I can give them the whole picture. My last sale, I recommended we accept the non-FHA loan offer.