Debunking Common Misconceptions about FHA Loans in Wisconsin

If you're a first-time homebuyer or have a low income, you may have heard of the Federal Housing Administration (FHA) loan program. However, there are some misconceptions about these loans that could be holding you back from considering them as a viable option. In a recent conversation between a real estate agent and a mortgage lender, they discuss and debunk some of these misconceptions.

Misconception #1: FHA loans are only for low-income borrowers.

The biggest misconception about FHA loans is that they are only designed for low-income borrowers. TJ Ebert of Guidance Mortgage, explains that there are no income limitations when it comes to FHA loans. He says, "The lower income is complete fabrication." This means that even if you have a high income, you can still qualify for an FHA loan.

Misconception #2: FHA loans are only for first-time homebuyers.

Another common misconception about FHA loans is that they are only for first-time homebuyers. However, Ebert says that being a first-time buyer does not offer any additional benefits when it comes to FHA loans. He explains, "There's no additional benefits that someone gets by being a first-time buyer versus somebody else."

Misconception #3: There are no limits to the amount that can be spent on an FHA loan.

While there are no income limitations, there are loan limit maximums for FHA loans. These limits are county-specific and vary by location. In Wisconsin, the majority of counties have the same limitations, with a maximum loan amount on a single-family home of $472,000 and a duplex of $604,000. Ebert clarifies that this loan limit refers to the total loan amount, which takes into account the down payment amount and whether upfront mortgage insurance is paid in cash or financed.

Misconception #4: All counties in Wisconsin have the same loan limits.

Although most counties in Wisconsin have the same loan limits, there are two counties that have different limits: St. Croix and Pierce County. Ebert notes that these counties are near the Twin Cities and may have higher costs of living, which could explain the different loan limits.

If you're considering an FHA loan in Wisconsin, it's important to do your research and speak with a knowledgeable lender who can help guide you through the process.