FHA Loan not welcomed by Sellers

[Matt N.]

My plan is to purchase a multi-family with an FHA loan. Multi-families in my area are priced 400-600k. I was speaking with one of the listing agents and she said seller puts offers with FHA in fourth place after cash, conventional and 203k loans because its got a lot of compliance strings attached to it. So if I submit an offer with an FHA my chances are already lower than others. So what's the next best for me as the buyer? Do all conventional and 203k loans require 20% down payment? I can stretch out and put 15% down but 20% is out of my range. Any advice? Lenders?

[Chris Mason]

Hi @Matt N.,

203k is a type of FHA loan. "Normal" FHA loans are 203b. Still 3.5% down, but 203k is a renovation product, so the condition of the property is irrelevant because your plan is to finance repair costs from the get-go. That's why they like FHA 203k over FHA 203b. 3.5% down, owner occupants only.

Best bet with FHA for MFR in hot markets, frankly, is to find them off-market. I only do a few each year, mostly off-market, because it's so hard to get offers accepted if it's an MLS property.