Interested B…, Home Buyer in San Ramon, CA

Can a seller require the buyer to get non-FHA financing?

Asked by Interested But Browsing, San Ramon, CA Mon Feb 28, 2011

We notice some listings specify "conventional" under the terms. We qualify for both FHA and conventional financing, but are leaning towards the FHA loan. If we move forward with an offer and it is accepted, can the seller require that we get conventional financing?

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>>The only time you can truly require the buyer to get a conventional loan is if your home does not fall into the FHA guidelines.

That is incorrect. As I said before, financing is not a protected class. Neither are people who can't get a conventional loan. A seller can take, not take, any kind of loan they want. They can even refuse cash if they want to.
0 votes Thank Flag Link Wed Mar 9, 2011
After your offer is accepted and it is in writing the seller cannot require that you get conventional financing.However, while you are negotiating your offer, it is the decision of the seller as to whether he will accept certain types of financing. The seller can reject your offer based on your type of financing or he can counter and state that he will accept your offer only with conventional financing. The question is why are you leaning towards an fha loan? Normally a buyer does fha financing if they are limited in cash for a downpayment however if you can go conventional and you really want the house, go for it!Good Luck!
0 votes Thank Flag Link Wed Mar 9, 2011
0 votes Thank Flag Link Wed Mar 9, 2011
Be very careful in requiring non-fha financing. You don't want to do anything that would appear to the public as discriminatory. The only time you can truly require the buyer to get a conventional loan is if your home does not fall into the FHA guidelines.
0 votes Thank Flag Link Wed Mar 9, 2011
>>And no, the seller can't determine what kind of loan you apply for.

Steven, the seller can't tell them what kind of loan to apply for but they can refuse to accept an offer based on the kind of financing the buyer is offering. What they actually apply for is a moot point.
0 votes Thank Flag Link Wed Mar 9, 2011
The seller can accept any offer they choose- as long as the property is in the guidelines of an FHA loan. The guidelines are different for conventional verses FHA. The seller just wants the loan to close!
0 votes Thank Flag Link Wed Mar 9, 2011
It is more the case that some homes simply won't qualify for FHA, even though you are qualified. And no, the seller can't determine what kind of loan you apply for.
0 votes Thank Flag Link Tue Mar 1, 2011
Any seller can accept/reject any term of any contract, including the financing. If a seller doesn't want to take an FHA offer they don't have to. FHA is not a protected class.....
0 votes Thank Flag Link Tue Mar 1, 2011
If the property cannot meet FHA guidelines that can be one reason. The other reason is that they want a buyer putting down more money.

Especially with REO's and Foreclosures, deferred maintenance can be too expensive for some lenders to correct, which makes an FHA deal impossible to close vs. conventional
0 votes Thank Flag Link Tue Mar 1, 2011
It all depends on what you're looking at. If the property's condition is such that it can't qualify for FHA financing, you'll see the comment s from the listing agent saying "no FHA".

In other cases, if it's a flip, there are also rules about qualifying for FHA loans.

Sellers don't have to state what kind of financing they would consider, but it may weigh in their decision-making. FHA has stringent rules and could take longer to close (45 days compared to 30 days for conventional).

FHA requires 2 appraisals --- and if the appraisals are so far apart, it may not qualify for FHA loan. This happened to my buyers on one flip: one appraiser came up with $400K and the other was at $295K. Neither one would change his appraisals, and my clients couldn't get their loan. So we had no choice but to walk away and find something else.
0 votes Thank Flag Link Mon Feb 28, 2011
With a pre-approval no reason for a seller not to consider an FHA buyer, however the decision to accept whatever offer/whatever terms is still up to the seller and his/her comfort level.
0 votes Thank Flag Link Mon Feb 28, 2011
No, but the seller can accept any offer they choose. So, if you submit an offer FHA and another offer comes in with conventional, then it looks like the seller would probably want to accept the conventional thinking it will more likely close. The seller only cares about closing. That is not to say that FHA will less likely close than conventional, but sometimes there are restrictions on the loan because of the home condition.
Web Reference: http://www.brokerdawson.com
0 votes Thank Flag Link Mon Feb 28, 2011
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