A buyer that is qualified for an FHA loan is a good buyer. But, YOUR HOME needs to be in good shape and appraise. if the house does not appraise, probably not going to ge the buyer to kick in funds. So, you better be priced correctly.
Do some due diligence and learn about FHA loans, qualifications and you should better. 3.5 % down in todays world is good.
I wouldn't be nervous solely based upon an FHA loan or low down. The current climate in lending focuses on documented employment with history.
While you have the right to ask for a credit report, you might also be giving a buyer a signal that you will be difficult to deal with. Few buyers are going to feel comfortable sharing their data, and especially if the practice is uncommon.
Whether the preapproval is for an FHA or conventional, either way.........the buyer could be denied their loan. There are plenty of people with 20% down that lack sufficiency in documentation who fail to qualify. As a reactive society, our lenders are now concerned with documentation in this post bubble world.
Is the property that you are selling in good condition? Is it a condo? FHA will require a property inspection in addition to the buyer meeting the lending qualifications. Many condos are currently not FHA qualified.
Assuming your property will meet FHA guidelines, here is my suggestion. Ask you agent to phone the loan officer who wrote the preapproval. That loan officer cannot disclose confidential info, but a conversation with him/her may give good insight. Your agent can ask if the buyers have submitted documentation in it's entirety or only partially. A good question to ask is if the preapproval based only upon a phone call and credit report? If your confidence is lacking at that point, what can be done to solidify it? i.e. Maybe the buyers can submit their docs? If the buyer's lender is working to help the buyer secure the contract, the lender will guide their buyer to submit docs, etc.
There's never a guarantee that a loan will be approved, and it's very rare that we see a mortgage contingency waived. Rely upon your agent for some due diligence with the loan officer....but don't lose the sale solely on the fact it's an FHA loan. There are hundreds and hundreds of those that are making it to the closing table right now.
Hope that helps.
Deborah's answer is dead on. we sell plenty of homes under FHA 3.5% down. and some times they are more easily approved than a conventional loan that is less than 20% down under varying circumstances. the reason for this is that lenders are more lenient on credit scores as long as the buyer has strong documentation to support his income. Plus they know that as long as the buyer meets the criteria for FHA loans they are insured by the government via HUD.
the only thing that you may need to be concerned with that hasn't been addressed here in the responses is that if your home is a "condominium ownership" home. In that case your community must be approved via HUD agency. and not recently a expired or expiring soon approval for FHA lending guidelines. your agent or the buyers lender can quickly find out online the statues of any such approval. If your complex is not currently approved many lenders will take the steps necessary in getting that specific community back on the approved list during loan processing time. And still get you closed. although that process may delay closing time. If the community is already approved or you live in single family home or a "planned unit development" (your agent or lender should know this as well or can easily find out) you really have nothing to fear.
hope this helps! and best of luck!
Bottom line is this. If the buyer feels confident they can get the loan, get additional earnest money and simply hope for the best
Your agent knows how to test the quality of an offer.
Having FHA does not make the potential buyer unqualified but conventional is preferred.
Don't ask for a prequalifying letter.Ask for a pre approval letter.
In this area pre approval letters are stronger and means that there credit has been reviewed.
Also call the lender or have your agent call and ask questions.
You can also ask for a pre approval that includes the buyers FICO.
I hope that helps.
Home selling is not something that you should go unassisted.
If you need local Realtor representation don't hesitate to call.