I agree with most of the points made above. One additional issue that sour sellers on FHA and HPAP loans is that these buyers are more apt to request, and indeed, need a substantial amount of closing help. I have closed transactions involving both HPAP and FHA and they can indeed be a pain, but in this market, they are as vibrant and used as ever. If you are considering going FHA and/or HPAP, I would not worry about those few sellers who scorn these programs, there are 20 sellers who would love to sell you their home vs the one who does not want to deal with the hassles.

HPAP can be a difficult program to work with. The house has to be in very good condition and it is inspected thoroughly several times. This is how GWUL protects their investment. A seller may not want to make the repairs necessary to comply with HPAP. Their expectations are similar to FHA but more strict.
I am in the process of completing the HPAP loan program and I have to say that most houses you will look at will not pass the initial inspection. Even after the seller had made all of the repairs requested on the house (paint, electrical sockets, lots of small things), another inspector came in and failed the house on things not even mentioned in the first report. This is not good if the settlement date is two weeks away.
HPAP is a good program but you cannot consider "Fixer upper" or "As Is" houses. Give yourself plenty of time and be involved in the inspections so you know what to expect.

All of these answers are correct but the most common one I have experienced is that the listing agent has no or a bad experience with the program or their is an issue with the home qualifying for the program. If you want to use these programs your best bet is to work with a realtor who is making sure you only look at homes that will work for this program. If these programs are what you and your lender agree give you the best purchase strength then it doesnt make sense to look at homes that dont qualify. If you have any more questions feel free to call or email!

Arthur Hardy, Realtor
W.C. & A.N. Miller Realtors
4910 Massachusetts Ave NW
Suite 119
Washington DC 20016
(202) 362-1300 office
(202) 362-3164 fax
(202) 895-2860 direct
web arthurhardyjr.com
email arthurhardy@LNF.com

Know of anyone thinking of buying or selling a home? Referrals are greatly appreciated.

There is ONE more reason that they may eliminate FHA, (I'm not sure about HPAP) other than 'unappraisable' . If the current owner bought it less than 91 days previously, then FHA will not even consider a loan. For example, if a person bought the property from an estate, bank, tax sale, etc; and then (if necessary) remedies, repairs or renovates the property quickly, and puts it back on the market (Something that happens fairly often) then even if it is appraisable, it would still not qualify for an FHA loan because of the "anti-flipping" policies of FHA.

Cordially,
Aaron Smith
(PS, Some PMI companies also have a variation of this rule. Ruling out FHA loans may not be sufficient.)

I agree with Ramesh. The seller probably doesn't want to deal with the hassle and red tape involved. And the seller assumes (possibly correctly) that someone using FHA or HPAP financing will have shaky credit. It may or may not be the best decision by a seller, but it's certainly their right to do so.

All financing requires that the house meets their standard to take the credit risk.

1. If the house won't meet these standard , they have to be brought up to those standards before closing.
Seller may not be willing to those repairs/renovations or may not want to allow the buyer to those before closing.

2. Even if the above is ok, the seller could be nervous about the timing and the creditworthyness beyond the lender's standards of the buyer.

rgds,

Ramesh Chandra

703 635 8209
mepcigroup@gmail.com

Nytodc,

Can you elaborate on your question a little more? I can't imagine that a Seller would not entertain offers from a ready, willing and able Buyer who was using FHA Financing. Due to the credit crunch, FHA financing has become very popular and used by the lion's share of Buyers in today's market. If the Seller is not entertaining offers from these types of Buyers, I have to imagine they have reduced their potential Buyer's pool by 80%.

With that being said, FHA is pretty strict on what Closing Costs they allow the Buyer to pay and have a strict requirement on the Condition of the Property.... in other words may require repairs by the Seller to meet their minimum standards... both of these items may mean more money out of the Seller's pockets. These are the only reasons I could see a Seller not wanting to deal with FHA Buyers.

Good luck and what a great time to be buying Real Estate!