Mark is right on this one. For the most part, FHA was designed to allow more people to qualify for new/used home mortgages at a time when banks were a bit more conservative on housing lending than at this current blip in time.

Currently there ARE non-FHA lenders out there willing to do so-called 0% equity loans, but I would recommend against that for the average single home owner (meaning owner of 1 home, not 1 person owner). There are usually higher fees, penalty points and, ineterest rates tied to those loans.

Also, just a note of caution (call it advanced warning) for those would-be new home owners regarding closing fees. Federal law requires full up-front disclosure on closing costs, but the rules are somewhat vague in some areas and many people end up being surprised by extra closing costs. Always insist that your closing agent send you a copy of the completed papers so that you have time to review them BEFORE you show up for closing. Review them carefuly for correct terms, fees, and total closing costs, and errors. Seems like a lot of grief, but remember that it will likely be the biggest single purchase you ever make, so it'* worth the extra time and effort up front.

I just bought a house (moved in yesterday), and I used FHA. I only used this because they approved me with no money down. I was having trouble finding a lender that would approve me because I work for commission. They only cared about my salary (which is not much), they didn't care about my W2, they said that money wasn't guaranteed (which is right). The FHA had so many hoops to jump through it was silly, and after I put a contract on the house I wanted, it took almost 3 weeks for them to approve it. I got into the house for a $2k contract and $500 inspection and no other money down. The closing cost were considerably more though, but I'm a salesman, and I negotiated for the sellers to pay them

We got approved for more house than we want. But when she asked if we'd want FHA or conventional, and we didn't know, she said "why don't we go with FHA" and she put that on the "preapproval certificate".

Okay, I will admit to inexperience again, but I would consider a different mortgage person. That story, unless highly abbreviated on your part, just don't sound right.

Our guy spent about 2 hours with us explaining our different options, how much we could/couldn't put down, what our payments would be, etc.

It certainly helps if you have a mortage broker who is willing to take the time to help educate you on your options. There are too many out there just wanting to move the customers along.

I think it'* time to find a new mortgage broker. Unless you've given them money and/or ordered an appraisal on the property you have no loyalty to him/her. The other alternative is to educate yourself. But with such a competitive market I'm sure there are other loan officers that are more than willing to educate you so that you make the right decision.