What To Do If The Seller Won’t Accept Your FHA Loan
Whatever their reasoning, a seller isn’t legally required to accept a loan they don’t like. While you may be able to work with them to understand where they’re coming from and find an agreement everyone is comfortable with, there are other strategies to try if you run into a seller who refuses FHA loans.
Find Out Why The Seller Won’t Accept An FHA Loan
You can find out a lot by asking, “Why?” The seller may give you a simple answer. If they have reasonable concerns, you may be able to find a solution.
To ease any financial concerns, try sweetening the deal by applying one of these strategies to show the seller you’re financially stable:
- Make an earnest money deposit (or a larger deposit)
- Waive seller concessions
- Consider a no-contingency offer
If the seller won’t provide a legitimate reason or refuses to offer any answer at all, be cautious. They could be trying to cover up a defect in the house.
Take Precautions
If you still want to forge forward with the purchase and the seller is flexible, take the necessary precautions to help ensure you’re making a sound investment. This may include performing research on the home, reading the property disclosures with a critical eye and requesting a thorough home inspection by a highly rated, professional inspector in addition to your FHA appraisal.
As you walk through the home, perform an in-depth inspection of every nook, corner and cranny. Look for defects like exposed wires, cracks in the walls, signs of water in the basem*nt (e.g., stains on the walls, mold and efflorescence) and other problems that would fail a home inspection.
Offer To Pay The Cost Of Repairs
If the seller is concerned about the home not meeting HUD guidelines and doesn’t want to pay for repairs, you can offer to pay for the repairs discovered during the appraisal. With your offer to pay on the table, the seller won’t need to fix anything before handing over the keys, and any repairs become your responsibility before you can close on the home.
Consider A Conventional Loan Instead
If you qualify, opt for a conventional loan instead. Conventional loans allow for lower down payments, but anything under 20% will require you to pay private mortgage insurance (PMI). To qualify for a conventional loan, you need a credit score of 620 or higher and a debt-to-income ratio (DTI) of 50% or less. If your credit score isn’t where you need it to be, you may be able to recruit a co-signer for your mortgage loan.
Withdraw Your Offer
If neither you nor the seller is willing to budge, it may be time to withdraw your offer, walk away from the home and restart your search. While it can be frustrating, it can save you stress, time and money. You may find a home you like even more with another loan type that finally unlocks the door to homeownership.
Talk To A Home Loan Expert
However you choose to proceed with the home buying process, you should work with a lender that will stay by your side every step of the way. Before deciding on your next steps, chat with a Home Loan Expert. You can get your questions answered and see what options you have available. You should also speak to your real estate agent about any complications with the transaction.
