FHA loans require too much paperwork.
In prior years dating back to 2000 and before, FHA loans required much more paperwork and documentation than conventional loans. Now, there are only about seven application documents more than conventional loans that buyers need to sign. Other than that, the process is quite simple.
FHA loans are too Expensive for the Seller.
This is some outdated thinking as well. There used to be substantial costs involved that the buyer was not allowed to pay. Now, the only cost the buyer cannot pay is a $75 tax service fee. This makes FHA much more attractive to sellers.
FHA rates are higher.
With tiered pricing on conventional loans, FHA pricing is actually much lower. The minimum FICO score required on a conforming loan before the borrower has to pay a higher rate is 740. On FHA loans, a low FICO score (620), gives the buyer the same interest rate as someone with an 850 score.
Mortgage Insurance cannot be removed.
Not true. It is possible to obtain a 15-year fixed FHA loan with 10% down payment which requires NO MI. If MI is obtained, it must be held for at least 5 years.
FHA loans take too long to close.
With a Double Eagle FHA approved lender, closing is fast and efficient.
FHA loans don't benefit the buyer.
FHA is the only loan with less than 10% down (3.5% down payment). MI is reasonable and underwriting is still quite liberal. All of these things benefit buyers.
FHA loans don't benefit the Seller.
This is probably the most significant myth still active in today's market. In truth, a 3.5% down payment with less than stellar credit and minimal cash reserves is a HUGE benefit to sellers everywhere.
You need money to close as a buyer.
All down payment and closing cost funds can be gifted by an approved source. The buyer needs ZERO funds of their own to close.
Conventional is a better loan.
In today's market, conventional loans are much harder to close and the MI is more difficult to obtain. FHA is the best loan out there today!
Buyers can't understand the loan.
It is very easy for even the most unsophisticated person to understand the numerous benefits of FHA. In the old days, it is true that some FHA calculations were complex. Not today.
The Government gets too involved in the process. A Double Eagle FHA approved lender controls the entire process from application to funding. With this control, the lender can complete the transaction quickly and meet timelines with zero interference from the Government.