Matt Hedges, Home Buyer in Fair Oaks, CA

FHA loan 3.5% down-payment 200k house. Will sellers balk at my offers if I am asking them to pay closing costs?

Asked by Matt Hedges, Fair Oaks, CA Mon Feb 4, 2013

I'm getting qualified for a FHA loan of 3.5% at looking to get a house in the $180,000-$200,000 range. I only have $12,000 saved up in my savings accounts - which means I will likely need to get some (or all) of my closing costs written into the loan amount. I have excellent credit and a good stable job, so I have no doubt pre-qualification will be very easy.

I would like to get a house in the Citrus Heights, Orangevale, Fair Oaks, Carmichael area.

With the current situation in these areas, with so many investment groups coming into town and buying houses with cash - will sellers in my price range balk at offers such as mine that requires them to pay their own closing costs?

Am I severely hampering my ability to find a home?

Help the community by answering this question:


Tony covered a great deal of it but keep in mind, Sellers are usually working on the "NET" offer meaning the offer price minus all of your requested costs. Also your lenders reputation in the community, if they are a direct lender or Mortgage Banker versus a Mortgage Broker etc. Its who you are competing with, if another offer comes in that nets higher, they stand a better chance. Also FHA has some condition requirements so if the program requires clear termite reports, roof certifications and repairs, those are all costs that have to be anticipated.

That coupled with the extremely limited inventory especially in that 200K and below market. If you are qualified for 200K, look in the 175K range as you may have to increase your bid to be competitive.

Inquire with your lender about grants available to you to assist you with costs or closing cost programs to help with your loan, also keep in mind these sometimes take more time so make sure your offer anticipates the extra time needed

Best of luck in your search

Bruce Slaton
Realty World eCurb REALTORS
2 votes Thank Flag Link Mon Feb 4, 2013
"Also your lenders reputation in the community, if they are a direct lender or Mortgage Banker versus a Mortgage Broker etc."

I am planning on going through Safe Credit Union - would you look at this as a good thing or bad thing?
Flag Mon Feb 4, 2013
Hi Matt
You are right on the competition of this market. To answer your question, it comes down to negotiations (which your Realtor will do) and the competition. If I may be direct, yes it will be difficult to get the seller to (1) accept an FHA offer and (2) pay your closing costs. But with that said, a lot of this comes down to the experience of your Realtor because we do get this done for buyers even in this market. There are also other variables such as the condition of the property you’re looking at, location, they type of seller that owns the house (example, HUD homes will give you a better opportunity than other banks, Fannie Mae also.) so there are several ways to get your offer accepted.

If you want my help, just go to my site and fill out the contact page, this will send your info directly to my cell phone.

Gabe Davidson
License 01404154
1 vote Thank Flag Link Mon Feb 4, 2013
Hi Matt,

As you already know in today's market and the shortage of inventory, it is very competitive for buyers. You want to do everything possible to make your offer acceptable to a seller the first time they see it. Don't ask for a laundry list of items for the seller to pay for. Speak to your lender, maybe a gift from a family member could help get you to the point where you don't have to ask for the seller to pick up the closing costs. Don't ask for a long escrow. Make the offer as clean as possible.

Good luck.
1 vote Thank Flag Link Mon Feb 4, 2013
If your market is as tough as it is here in San Diego, then asking for closing costs will be a problem. If there are other offers on the properties you are bidding on, just being FHA will be a problem.

In this competitive market, I recommend writing the strongest offer you can. If you don't have the closing costs, save up!

Best of luck.
0 votes Thank Flag Link Mon Feb 4, 2013
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