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FHA is short hand for Federal Housing Authority and they underwrite what is known as the FHA loan.
And, in the Olden Days of Yore, these loans were a mighty pain to get. They were expensive, the appraisal requirements were overly fussy and there was no telling how long it would take to get the loan and close escrow.
Today, FHA is a wonderfully useful loan. It is about the only way a buyer can buy with less than 20% down payment. It is nearly the only way a parent can buy an “investment” in partnership with an adult child for less than 25%- 30% down. It is one way to buy when you have a low credit score. The other way involves Guido and his very scary associates. (I kid, I kid!)
It is a very useful loan, and many of the problems of the past are gone. FHA takes a little longer to process, but it is otherwise a solid loan product. (Oh, I also have some pretty amusing “stupid things FHA appraisers have said” stories- but that is another post for another day)
It is a shame that FHA buyers are often treated as second class offers. While it is true that I would choose a 30% down payment buyer over an FHA buyer most of the time, I would not dismiss an FHA buyer sight unseen.
In fact, once the feeding frenzy of investors scooping bargains for all cash is over, I think FHA will be the new normal.
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Kendyl Young
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