Home Buying in 91601>Question Details

Alpha, Other/Just Looking in 27704

I have put several offers on houses the past month, I have a pre-approval from Bank of America, proof of

Asked by Alpha, 27704 Fri May 22, 2009

funds of 20% down and I get the offers in the day the houses go on the market. Even though I have 20% to put down I want to purchase the house with an FHA loan so that I have enough money to do renovations and have money in reserve. The Realtor tells me my offers aren't even being looked at because I have FHA checked on the offer and informs me to say that I will have a traditional 30-year fixed loan, then I can always change it later. Why are they discriminating against FHA Loans, and is it really that easy to change my offer once I submit it, to have a 30-year fixed to get my foot in the door, then switch it to an FHA???

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With all the competition out there on foreclosed property, I can see why the seller/bank would be discriminating against your FHA. Even thought you have 20% down! It's just crazy, but it's happening. Think about it...if they have a handful of offers to choose from, say 2 FHA and 3 CONV, all 20% down, the 2 FHA offers will be discarded, regardless of price, just because of the guidelines that FHA has on condition, etc. The CONV offers are just safer and less risky for the seller/bank. Typically speaking, you can change the terms of your financing in the middle of escrow so long as it doesn't effect the seller. I'm not familiar with contract law in your state, but I think you should be okay. This question is really for your agent and more importantly your lender. Also, make sure you take it upon yourself to really read and understand the financing portion of the purchase contract. Don't get yourself into a situation where you would be in danger of losing your earnest money. Best of luck to you.
1 vote Thank Flag Link Fri May 22, 2009
I had a similar situation with one of the families I represented so what we did after getting passed up on 8 offers was that we offered 10% down on our offer then after we got accepted, I showed the seller how strong my buyers are and they allowed me to change to an FHA loan so that we can save the deposit for repairs to the property. Appraisal came back fine this morning and we are set to close in the next week. Its all about negotiating and getting to the table so let me know if you need any assistance.
0 votes Thank Flag Link Fri Oct 17, 2014
Her is what the California Residential Purchase Agreement and Joint Escrow Instructions form states on any changes to what is put in this contract. This is under section 3. Finance Terms subsection K.

“K. BUYER STATED FINANCING: Seller has relied on Buyer’s representation of the type of financing specified (including but not limited to, as applicable, amount of down payment, contingent or non contingent loan, or all cash). If Buyer seeks alternate financing, (i) Seller has no obligation to cooperate with Buyer’s efforts to obtain such financing, and (ii) Buyer shall also pursue the financing method specified in this Agreement. Buyer’s failure to secure alternate financing does not excuse Buyer from the obligation to purchase the Property and close escrow as specified in this Agreement.”

You may want to contact a Real Estate Lawyer if you have any questions about what this section in the contract means. Make sure your agent is aware of what the contract actually says as there are consequences if it does not work out.

Good Luck to you on your home search.
0 votes Thank Flag Link Mon May 21, 2012
FHA loans are actually the best loans offered in the market these days.
In most escrow these days you will have more problems with banks not funding their deals than FHA Government insured loans.
FHA will tell you from beginning if you qualify or not and if you're qualified than 90% you will actually close.
I can help you with that.
I work for coldwell banker in studio city and our loan officer can really help you.

Thank you.
Web Reference: http://homesinsale.com
0 votes Thank Flag Link Fri Jun 12, 2009
FHA has strict guidelines and require that everything in the house must be fixed. FHA appraisals also tend to be stricter. This can be a PITA for the sellers. So they would rather deal with a straight forward conventional loan buyer.

As for changing to an FHA loan later once the offer is accepted, I do not see it being an issue.

Hope this helps.

Ron Miller
0 votes Thank Flag Link Fri May 22, 2009
I dont understand it - really. See article on subject Living Lies « foreclosure webpage... your loan past FHA and documenting compliance with the Governement. M Soliman ... Founded in 1969, Countrywide Financial Corporation is a diversified ...foreclosurewebpage.wordpress.com foreclosurewebpage.wordpress.com / tag/living-lies/clipped from Google - 5/2009
0 votes Thank Flag Link Fri May 22, 2009
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