I’ll often get questions from some buyer’s agents asking if my sellers would be “OK” with an offer from a buyer who is using FHA or VA for their loan. (FHA stands for “Federal Housing Administration” and VA stands for “Veteran’s Administration.”). It used to be that these types of loans were frowned upon because of the extra red-tape, restrictions, delays and extra costs to sellers.
FHA and VA loans started out with the goal to help buyers get into homes when they didn’t have 20% saved up for a down payment, or they didn’t qualify for regular conventional financing. Buyers can buy homes with as little as 3.5% down for an FHA loan, and 0% for VA, and even with lower credit scores than required with other financing options. The trade-off was that they did take much longer than conventional loans, and they had pretty tough rules about the condition of the property, what fees the buyer could pay, etc. Their goal was to “protect” the buyer, but the end result was that agents and sellers would refuse offers from FHA and VA buyers because of the perceived hassle.
A few years ago, FHA and VA both streamlined their programs and removed much of the delays and rules. VA does still require a pest inspection to be done and to have the Section 1 items repaired (sometimes even the Section 2 items) and both of them require the home to be habitable and safe from any obvious hazards, major appliances need to work, no peeling paint, etc. If we are dealing with a home that’s been well-maintained, I tell my seller clients to not to turn down a FHA or VA buyer out of hand. If the home has a lot of deferred maintenance that the seller isn’t willing to address, then FHA or VA may not be the best choice for the loan.
If you have questions about real estate, call me at (925) 240-MOVE (6683). Voted “Best of Brentwood” multiple times. To search the MLS for free, go to: www.SharpHomesOnline.com. Sharp Realty. #01245186