Sell Your Home Faster by Making It FHA-Friendly

Bauer
8 years ago

To qualify for a Federal Housing Administration (FHA) loan, the home you are buying has to meet certain standards. While the FHA does not fund the mortgage directly, the government agency does insure the lenders that offer FHA loans to homebuyers. In fact, the FHA is responsible for insuring home loans for approximately 30 percent of homebuyers today.

FHA loans offer option to homebuyers who:

May have lower credit scores (credit scores as low as 580 may qualify);
Are unable to come up with a 20 percent down payment ;
Or feel better about the security that a government-insured loan offers.

As a home seller, if you make your home a best friend of the FHA, it will likely be easier and faster to find a buyer.

Lending Limits

The FHA limits the loan amounts that it will insure. These limitations may vary slightly from area to area, so you will want to check to see what your local lending limits are with your trusted mortgage lender or find out online from the U.S. Department of Housing and Urban Development (HUD). For example, the FHA will insure up to $729,750 in the city of San Francisco, but will only insure up to $271,050 in New Hampshire.

[Mortgage Help: Get your free credit report and see if your credit score is mortgage qualified]

Help with Closing Costs

Many homebuyers who get FHA home loans need assistance with closing costs. The FHA allows first-time homebuyers to put down as little as 3.5 percent. Additionally, the FHA allows sellers to pay up to 6 percent of the closing costs for the buyer, according to Susan Herman of First Equity Mortgage Bankers in Miami. FHA says it is considering lowering this amount to 3 percent.

Condo Approval

[Mortgage Help: Get your free credit report and see if your credit score is mortgage qualified]

Condominium values have taken the biggest hit over single-family homes during the housing market slump. Some condos are approved for FHA loans and some are not. Check with your condo association or look your condo up online at the HUD website to find out if your condo is on the FHA-approved list.

A FHA-approved property can be a big selling point. You can even promote your home as FHA-approved on your “For sale” sign, listing, and any marketing materials you or your real estate professional uses sell the home.

While some of the aspects of making your home or condo FHA-friendly are out of your hands, some are not. Since FHA mortgages are so popular, especially with first-time homebuyers, it is important for you to understand how the FHA process works. Knowing how to use FHA as leverage and how to get the mortgage-insured program on your side can really make a difference in selling your home quickly, or selling your home at all.

[Mortgage Help: Get your free credit report and see if your credit score is mortgage qualified]

Learn more about the FHA loan and whether it’s right for you – as a homebuyer or seller – at Quizzle.com. You’ll get access to free home loan recommendations and other resources to help you buy, sell or finance your home.