FHA Loan - New construction -Foreclosure - is it possible?
We have found a home, never been lived in, recently finished and is a foreclosure. The Bank/realtor says no FHA or VA loans. Why no FHA loans? Is there a way around it and still get an FHA loan?
House is complete and been on market since Sept 08
Have done walkthrough, home is new, everything that I see is completed.
- Anonymous1 decade agoFavorite Answer
The bank doe snot have to take FHA if they do not want to.
most likely the house is not 100% complete, so FHA will not accept it.
- loanmasteroneLv 71 decade ago
The reason most builders don't want to have their developments financed by FHA or VA
VA the seller is required most of the time to pay all closing cost and fees thus reducing the builder an ample return on his investment. Then there are repair on the property that the VA might require that a conventional lender might not require.
The same is almost true of a FHA loan. The seller might be required to make repairs that a conventional lender might not require. There might also be closing cost that the seller might be required to pay also, thus reducing his profit.
Simply because a home is new does not mean that all things will pass VA or FHA requirements. Lenders don't want to have to put up with the government requirements.
I hope this has been of some use to you, good luck.
- StuLv 51 decade ago
I agree; the reason for no FHA loans is that it will probably not pass FHA inspection. Some banks have, or had at one time, a conventional loan that was an FHA knock-off, so that an FHA inspection was not necessary, but other terms were similar to an FHA loan, so that might be worth a try. I cannot confirm that any lenders still have this type of loan in the current situation, however. BTW, in this area, it was called the "Best Loan."Source(s): 20 years in Real Estate
- Anonymous1 decade ago
That usually means the house will not pass an FHA/VA appraisal without additional work being done to the house.
Have you done a walk through? You may be able to talk them into letting you use FHA by doing an FHA 203k loan so that you pay for the repairs and not the bank.Source(s): I'm a mortgage banker/broker