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That's silly. An FHA is still desirable as they are easier to obtain compared to a conventional loan. Of course both are made irreverent when it comes to cash. Of course it still comes down to what the seller will and will not take but I haven't seen anything otherwise that would make me believe that a FHA loan isn't viable.
FHA loans have a stigma among sellers. My great uncle and aunt are selling a house right now, and even they said they would only consider an FHA offer if that was the last one -- because FHA has a history of requiring sellers remedy things that turn up in in inspection that a conventional loan would not require fixed.
Their words, not mine.
FHA might require more fixes than conventional (FHA = less money for seller than CONV), conventional may require more fixes than cash-only (so CONV = less money than cash). Its just math .
I have seen a few homes on the market that will not accept FHA loans, but it is usually because they require fixing that they know won't pass FHA appraisal, or they have add-ons with no permits, and other such nonsense.
@Mickey11 wrote:
I talked to our LO and he was implying that compared to cash or conventional offers a FHA offer is the last one they consider and in our market where properties are getting multiple offers this is very worrying. Anyone have a problem before with
Your LO is correct; gov't loans, unfortunately, and unfairly, have a stigma attached. I'm in a market that is quite competitive, and made offers on seven different properties before being able to successfully getting an offer accepted. From what my Realtor told me, my offers were just as, or more competitive than the winning offers, but because I'm using a gov't loan, I kept losing out.
If at all possible to go conventional, do it. If not, just be tenacious and develop some thick skin, and keep looking.
@Mickey11 wrote:
We might have an opportunity for new home construction....are builders more indifferent to loan type?
I believe so. I used to work for a lender who served as the preferred lender for several different builders. The builders never seemed to care about the buyer's loan type.
IMO, loan type is only an issue for resales.
I am currently in this situation right now. I am both APPROVED conventional and FHA. The reason I am leaning towards FHA is due to the lender credit. In my situation for conventional, I would have a higher rate with no lender credit.
I talked to several individuals and the truth is, FHA loans are frowned upon. Unless you believe that the property is in sound condition, with no major repairs, you will be fine. I have submitted almost 10 offers and have always been beat out by either a CASH offer or CONVENTIONAL offer.
Lately I have been pondering the idea of submitting the offer as CONVENTIONAL with 5% down. Then after the offer is accepted and down the line, I would ask for an addendum changing the financing type to FHA and modifying the contract to reflect his and the 3.5% DP vs the 5% DP; all along while conducting the loan as FHA.
This is no way will affect the seller as I am not asking for concessions or changing the closing date. The seller would not be affected by the change.