For those who are not aware FHA is a the only really viable loan solution for those who are considering buying a home right now with no more than 3.5% down. This may come as a shock to some, but yes people are still buying homes with very low down payments, and the government is insuring them. Restrictions and guidelines are tough so most realtors prefer not to have to deal with FHA especially on the selling side. They require additional appraisals, the home must be free of termites, all appliances must be working, chimney must be in tact, no roof leaks, over all the home must be in good and livable condition before close. Also the transaction may take a bit longer depending on the lender you use and if they are set up for FHA and have their own underwriters. Also is very difficult to sell a home over appraised value with an FHA loan. FHA has a special addendum that sellers and buyers are required to sign that absolves the buyer from any liability if the home does not appraise for the purchase price.

Recently I closed two listing transactions with FHA loans. The first was a nice well maintained home in Santa Clara in Darvon Park. The buyers really wanted the home and before we could get a open house done they sent us a good offer and my seller’s accepted it. It was a roller coaster ride from there, with several extensions to the contract, but nonetheless it closed and a very deserving family bought the home.

The other transaction was an older home in the Old Quad of Santa Clara. It had its fair share of problems but went through the FHA process with an approval. Due to the price of the home being under $400K a majority of the buyers were FHA and the likelihood was that we would have to sell it FHA. One thing about FHA buyers is they will generally pay more than non FHA due to the fact that their supply of homes is more limited than buyers using conventional loans. With that said, be sure to have an accurate assessment of your home’s value because regardless of what the buyers offer, FHA will not lend and will absolve the buyer from any liability if the property does not appraise for the purchase price.

Although some sellers and agents may consider them to be a hassle, but FHA loans do close. Its important to be patient with the process, allow substantial time for contingencies, and set your expectations accurately and it should close.