Five Can't Miss Tips for Brightening Your Bath
Buying a Home? New Construction Offers Many Benefits
| Yes, you can buy a Foreclosure or Short Sale property with an FHA Mortgage. |
With an FHA mortgage you are not limited to any type of house (although condo ownership can be a problem with FHA financing) but you are limited to "houses without major problems or safety issue".
A cash buyer can purchase any home.
A 20% down conventional home loan may require repairs if any major defects are known or discovered by the appraiser.
With an FHA mortgage, when the appraiser goes out to the property they check for repair issues PLUS safety violations.
For instance,if the house has flaked paint and it was built before 1978, the FHA mortgage may require scraping and painting (it could have lead). A conventional mortgage doesn't care about paint.
The "mortgage required" repairs and safety issues must be corrected before you can obtain the mortgage to purchase the home. The repairs can usually be negotiated with the seller IF the property isn't being sold as-is (foreclosure and short sales are sold as-is, hence the problem).
A seller may accept an offer with FHA financing but state they are not going to do any of the FHA required repairs. There are cases where the home buyer has been painting their future home in order to satisfy the FHA lender required repairs.
A work around for repair or safety items is to do an FHA 203k Renovation loan. You borrow the money to purchase the home and on top of that borrow the money needed to repair or upgrade the home. This allows the FHA home buyer to purchase any home they wish.
