While there are many benefits of FHA insured mortgages, there are disadvantages to these types of loans as well.First, there are limits to the amount of money you may borrow through the FHA loan program. FHA loan limits vary based on the area in which the home is located, and change on a regular basis. Additionally, the FHA places a restriction on the percentage of your income that can be required to cover your mortgage payment.


Another disadvantage of an FHA loan is the required mortgage insurance premium (MIP). A 1.5 percent MIP must be paid at the time of closing, and an additional monthly MIP fee must be submitted with each  monthly payment. This is insurance premium is designed to protect the FHA against defaults. In the event a borrower defaults on an FHA loan, MIP premiums are used to pay off the loan.