We bought an old 1948 house that didn't have enough crawl space also. The FHA loan required the 18 inches also. The seller agreed to have the soil removed. We didn't have hardwood floors so they cut a big square out of the floor and removed the soil through a window. They only had to remove the soil from half of the house. Later my husband had to remove bucket loads out to lower another area for a project. Hard work but for a dream home it might be worth it.

First of all are you working with a Realtor. Next do you have someone that is in the business for 5 or more years. Next you need to understand that your credit score and FHA do not go together. Next the Crawlspace on a FHA loan is only a recommendation and the expertise you need is going to require creative financing with experience. Call your local Realty office and ask if any of the brokers have banking experience as this is hard to find. Next if it's your dream home it can be done if you can truly make the payments and call if you want advice as I can only see the issue is your credit score.

Maybe quit dreaming and find a real house that meets the 18" requirements. Do you want to pay to fix the problem? Sounds costly.

We have had contractors here go under a home and have it excavated rather than having the home raised! It depends on how many inches it needs to go up and is it on a concrete slab or is it on a block foundation? If it is on a slab - then yes you may have to raise the home - otherwise - you may check with a contractor to see if there are people who will do the actual digging out of the foundation. Maybe that is a negotiation you can make with the seller - that way not only will you be able to buy the home and get a loan but in the long run you will also be able to sell it! Thank you for the question- I dont see that as a reason to give up your dream! Lana

Since the Sellers now know that they cannot sell the home in its current condition, because no one but the FHA is backing any home loans right now, and, since you currently have, as you state, over 70% of their listing price; I might offer them the $140K just to see if they would take it .... cause ya never know ....

But, think long and hard first about buying a home which you cannot get mortgaged; please, don't cause your dream to turn into a nightmare as so many others have .... the cost of retrofitting to meet FHA habitability standards will cost that additional 30% or more the Sellers were asking ....