How to Avoid Issues with FHA Financing
This is why FHA financing might turn sellers off from your offer.
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FHA financing can be a great way to make an offer on your dream home, but some sellers avoid offers that use it. To understand the issue, it’s helpful to think about it from the seller’s perspective. An FHA-backed offer comes with hurdles they can avoid by accepting a cash or conventional offer. Let’s go over the main problems.
With an FHA loan, an appraiser is required to inspect the property. If they find any issues, the seller is required to fix them before the mortgage lender can approve the loan. In contrast, cash or conventional buyers can accept the home without the fixes. They can even waive the appraisal upfront.
"Perception alone could stop sellers from choosing an FHA offer."
Another issue is the perception that FHA buyers don’t have extra funds in case the home doesn’t appraise at list price. This may not be the case, but the assumption alone could stop sellers from choosing an FHA offer. If you make an FHA offer and you do have extra funds, notify your agent so they can alleviate the seller’s fears.