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What's up with sellers not wanting to deal with FHA buyers?
Dated: April 27 2022
FHA loans are government insured loans. This means that the loans typically have a below-market interest rate and a lower down payment requirement.An FHA loan, requires as little as 3.5% downpaymnet, but it could be as much as 10%. That’s substantially better for borrowers than coming up with 20% down for some traditional mortgages.
FHA loans also often come with relaxed qualification requirements compared to other mortgage options. That’s why these loans have become an alternative for many buyers who have a less than perfect credit history. It should be noted that some credit situations will require a higher down payment.
So why is it so hard to get an FHA offer accepted?
Sellers, though, often worry that the type of buyer who relies on an FHA loan might be a riskier one. They worry that the lenders working with these buyers might discover financial problems while verifying their income and debts. Sellers often believe, too, that buyers who need a lower down payment might not be able to afford any home repairs. Sellers worry that FHA buyers because of their lack of cash might be more willing to walk away from an offer if the home inspection turns up any problems.
So, you have an FHA loan? What can you do to make your offer more appealing?
FHA buyers do have a few options to make their offers more attractive to leery sellers. First, they can make a full-price offer. If FHA buyers can’t compete when it comes to the type of financing they’re using, they can at least compete on sales price. A high offer will make many sellers overlook their FHA concerns.
FHA buyers can also offer to buy a home in as-is condition. This is a risk – buyers never know what problems a home might have – but is one more way in which an FHA buyer can compete.
A lifelong resident of Lorain County, I take pride in my hometown, and hope that you will too! I'm a mother of 2 school aged children and happily married. I volunteered as a girl scout leader, I volun....
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