FHA Loan Desirability

[Steve Oak]

Hi BP community,

This is my first post on the forums and I'm curious if using an FHA loan and only putting down 3.5% on a MFH for house hacking is seen as "less desirable" of an offer to a seller that may also receive offers with 20% down (or any down payment significantly higher than 3.5%)?

This idea stemmed from my parents who have invested in a variety of RE properties in across multiple states so I’m sure there’s some truth but I’m open to hearing others’ thoughts.

[Mike Cumbie]

Part of an offer is showing the ability to close. Take 2 offers:

1) FHA, requires a government inspection, pre-approval letter is for exact amount of purchase price, Buyer is asking for 6% in sellers concessions because they don't have enough to put down.

2) Conventional, Pre-approval letter showing they are approved for 250K more than asking price. Price is equal to above offer considering the 6% concessions. A bank statement showing more than double what they need to close on hand in cash.

Which offer do you take? Who do you think has better odds of closing the property? How much less could offer 2 be that you would still take that one over the first one? So I see how some people say "it's just the end number" but sometimes a stronger offer can be less money.

Good Luck!