Is FHA Offer's Real That Bad ?

13 Replies

Hi 

I've been working for a buyer for 3 months. Over the course of that time I have submitted at least 4 offers. All offer have been denied because she can only do FHA. Now I know the issues that can show up with FHA loans but is it really that bad ?. I have a buyer that REALLY needs to buy a home for personal reasons and all sellers deny her. We have waived remedies , waived home warranties , offered money ( She has alot of funds saved but lower credit ) and nothing works. I have the chance of losing a big client because of this issue , Please offer advise.

Thanks 

As a seller if I have two offers, one FHA and one conventional, I lean towards the conventional, even with a lower offer. FHA has risks for the seller. If the house does not appraise, the buyer cannot bring more money to the table (from my understanding), and this appraisal stands with the home for 6 months with any other FHA buyer. FHA also has some strict home inspection criteria that has to be completed. Some items come up (life safety) and are non negotiable for the seller. These can be large ticket items that could hurt the deal.

The only advice I can give, if the only reason she is losing deals is due to FHA, is to get her with a good mortgage broker who can find her a non FHA mortgage.

Originally posted by @Brian Pulaski :

As a seller if I have two offers, one FHA and one conventional, I lean towards the conventional, even with a lower offer. FHA has risks for the seller. If the house does not appraise, the buyer cannot bring more money to the table (from my understanding), and this appraisal stands with the home for 6 months with any other FHA buyer. FHA also has some strict home inspection criteria that has to be completed. Some items come up (life safety) and are non negotiable for the seller. These can be large ticket items that could hurt the deal.

The only advice I can give, if the only reason she is losing deals is due to FHA, is to get her with a good mortgage broker who can find her a non FHA mortgage.

Yah sheś been working with a loan manager. She owes like 80k in school loans.

Originally posted by @Kareem Lyons :

Hi 

I've been working for a buyer for 3 months. Over the course of that time I have submitted at least 4 offers. All offer have been denied because she can only do FHA. Now I know the issues that can show up with FHA loans but is it really that bad ?. I have a buyer that REALLY needs to buy a home for personal reasons and all sellers deny her. We have waived remedies , waived home warranties , offered money ( She has alot of funds saved but lower credit ) and nothing works. I have the chance of losing a big client because of this issue , Please offer advise.

Thanks 

Is it the down payment or credit that's forcing her into the FHA bucket?

If credit, it kind of is what it is... be ready to write a lot of offers, make sure the lender has given them some tips to improve their credit so they can look at conventional if it's 3+ months from now and you still haven't gotten an offer accepted, and in the meantime get back to drumming up more business. Some top agents flat out refuse to work with FHA buyers.

If they have good credit but down payment is the issue, there are 97% LTV Conventional options out there that'll make your offers stronger. I nudge people away from FHA whenever I can simply because it's all academic if you can't get the offer accepted.

Originally posted by @Chris Mason :
Originally posted by @Kareem Lyons:

Hi 

I've been working for a buyer for 3 months. Over the course of that time I have submitted at least 4 offers. All offer have been denied because she can only do FHA. Now I know the issues that can show up with FHA loans but is it really that bad ?. I have a buyer that REALLY needs to buy a home for personal reasons and all sellers deny her. We have waived remedies , waived home warranties , offered money ( She has alot of funds saved but lower credit ) and nothing works. I have the chance of losing a big client because of this issue , Please offer advise.

Thanks 

Is it the down payment or credit that's forcing her into the FHA bucket?

If credit, it kind of is what it is... be ready to write a lot of offers, make sure the lender has given them some tips to improve their credit so they can look at conventional if it's 3+ months from now and you still haven't gotten an offer accepted, and in the meantime get back to drumming up more business. Some top agents flat out refuse to work with FHA buyers.

If they have good credit but down payment is the issue, there are 97% LTV Conventional options out there that'll make your offers stronger. I nudge people away from FHA whenever I can simply because it's all academic if you can't get the offer accepted.

I think DTI is the issue , She makes good money and has 40k saved up. she was original pre approved for a FHA or Conventional loan. Her speaking with the lender pretty much puts FHA as her best option

Originally posted by @Caleb Heimsoth :

too few.  Make more offers on more properties 

 I want to apologize I miss typed on the time frame. I have been working with her for maybe 1 1/2 months. We placed offers on 3-4 homes this past week and a half alone. 

I sold 3 last year and wouldn't allow FHA or VA. The homes were older and there are too many conventional borrowers out there. Didn't want to wait 3-4 weeks only to have the fha appraiser give me 'the list'. Too bad. Buyer isn't allowed to help pay and it won't fund without remedy.

2 of them did 3% down conventional loans.  They must have gone to an in-state school.

80K in student loans, 40K saved up. Have her talk to a loan officer about paying down (not OFF even if she could, probably don't want to lose that type of account off the credit report right at this moment as that has adverse impact too) those loans and see what difference that might be able to make to her credit score and what impact it would have on conventional loan programs available to her. 

Maybe an appraisal gap? That is another issue with FHA loans. If it doesn’t appraise the FHA borrow is not required to pay above. I would consider an FHA over conventional if it had an appraisal gap and they offered to pay for any FHA required inspection items.