First Home No FHA Loan?

Question

Hey

I’m putting an offer in on my first home but they don’t accept fha loans. I do have a 100% finance conventional loan however, the no FHA stipulation makes me feel there is something wrong. The house was everything I was looking for BUT when about to leave I noticed there was NO OVEN.... The stove top was on the island with a vent hood over It however no oven. I was thinking about replacing island with stove and oven seeing it’s all electrical anyway..... Please help I would hate to buy my first home and be stuck with no oven. I’m open to all ideas!!

Wayne Brooks · Answer

First of all, for an fha loan, the house does Not have to have an oven....but, if it has one, it has to be in working order. This misinterpretation could be the reason they are saying no fha.

Sellers refuse fha for 3 reasons....

-The house won’t pass fha inspection requirements....easy to establish

-FHA buyers typically can’t close as often as others...they are going fha because they have marginal credit, DTI ratios and/or a small amount of cash

-They had a previous fha contract, the appraisal came back lower than the sellers want...an fha appraisal sticks to that property for 6 mo.s

Tracie Davis · Answer

The no oven problem seems easy enough to fix. I assume the real problem is they won't accept FHA loan and not knowing the reason behind that decision. Found this on the internet...

• Underwriting concerns. Some sellers believe that FHA loans are more likely to fall through during the underwriting stage, since the program attracts borrowers with lower credit scores and other issues. But the data don’t support this notion.
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• I assume financially you are ok so no concerns there...no need to worry about this.
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• Appraisal and inspection concerns. An FHA home appraisal is different from one where a conventional loan is being used, because it includes a property evaluation. FHA-approved home appraisers will determine the value of the property, but they also must ensure that it meets HUD requirements for health and safety. Some sellers fear that their homes will not pass this review process, so they see an FHA loan as a disadvantage to them.

You said there was no oven, so it will not pass inspection...now you have the reason. Feel good about continuing to buy.

Bob Okenwa · Answer

When sellers will not accept FHA loans, that usually indicates that they don't trust the individuals who use these loans to close since FHA has more stipulations than using a conventional loan. Certain appliances must be present in the home to make an FHA loan work and the seller appears to not be willing to make such updates to the home.

If you can make a loan work without an oven being present, reduce your offer price or request that the seller provide an oven prior to closing.