So now we are aware of loan programs that don’t require 20% down. FHA is a very popular program with many advantages for borrowers. However, the property you are purchasing must be eligible for FHA. In general, FHA will allow the following (must be owner occupied): single family and 2-4 units, condominiums and town homes, and modular construction. FHA will allow financing on mobile homes but most lenders will not loan on these types of homes. Some local banks, credit unions, and mobile home finance companies will lend on a mobile home.
FHA home inspections and appraisals have to be performed by FHA licensed professionals. These inspections can be very detailed and often times FHA will require conditions to be met with the property before the home closes. Some red flags on appraisals for FHA loans are if the property has been sold within the last 90 days. The bank may want documentation on what work has been done to justify why the price increased significantly in 90 days. Another big factor is the condition of the property. Make sure no paint flaking and proper rails are installed among other things. Finally, private roads tend to be an issue for FHA appraisers.