Trying to buy house in Woodlands. We were going to do FHA loan. Presented offer and the Sellers says they will only deal with a conventional loan.

What are the advantages/disadvantages to me if I go conventional. Would do 5% down. Are there less closing costs for me with a conventional loan? The interest rate might be higher than FHA?

The key to FHA vs conventional is credit score. The higher the score the better the conventional is. 3.5% vs 5% down is not a lot of difference. So your rate on conventional is based on your scores. FHA has somewhat lower rates regardless but has a 1.75% fee based on loan amount added to your loan. Its a soft cost but a cost.

What are the reasons a seller would only deal with a conventional loan?

histag who knows. could be bias of the owner or the realtor. They could view the loan as more risky buyer, which is somewhat true. But either loan can be closed if the mortgage guy does a good job pre-approving it.

Probably has zero to do with the terms/financing and more than likely is due to do the condition requirements versus conventional.

The only time I see it spelled out is for homes with minor cosmetic issues to very rough cash only properties.

FHA loans have a lot of strings attached.

FHA doesn't have strings like it used to. An uninformed agent is probably the cause of the seller's bias against FHA.

Agree with jj. FHA is much more streamline then 6-7 years ago. Both loans the property has to be "livable and secure".

I haven't seen an FHA deal require any repairs in years.

if you have good credit and can put 5% down then do an 80/15/5. skip the MIP and PMI

If he's a first time home buyer he would have to qualify with adequate reserves and probably lower combined loan to value ratio in addition to credit requirements for an 80/15/5.

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I haven't seen an FHA deal require any repairs in years.

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Mine did, but that's just because the previous owners thought they were renovation experts and screwed a lot up. Then tried to diy the fixes, and the lender ended up having to tell them to stop and require a professional.

FHA does put more restrictions and regulations for appraisers, but it's definitely not as bad as it used to be.

I can't blame the seller though. The perception that FHA has more red tape and takes slower to close is still out there, no matter if it's accurate or not. You should have your Realtor educate their Realtor on why your offer is safe.

They mentioned worry about the FHA appraisal. Their agent claimed that the FHA appraisers are tougher (I don't know).

We are the ones wanting to close in a hurry, they are freaked out that we want a 30 day close. We have to be out of our current home by June 13th.

It's not the appraisers that are tougher. It's the FHA guidelines that they have to adhere to.

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It's not the appraisers that are tougher. It's the FHA guidelines that they have to adhere to.

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This, and it really hasn't gotten any less stringent. A little more vague in distance requirements for storage tanks/highways and airports, but the rules really haven't changed. (the big exception being concrete as acceptable as flooring)

They can be real PITA for anything older not in good to great condition.


Y'all should have read the back in forth I had over requiring a railing for 2 steps that they were insisting on.

I will add that I recently had an acquaintance trying to sell his home have the buyer's get denied (FHA) because he had two recent water claims on the property. Busted water heater and a bad pan for the AC unit in the attic. Both minor, but killed the deal when the underwriter or whoever (not the appraiser or agents) got wind of it.

Never heard that before.

If that wasn't in the appraisal how did it come to light?