The Challenge of Being an FHA Home Buyer in a Seller’s Market

fha-home-buyer-woes2Being an FHA home buyer in Silicon Valley is a challenge right now, especially if you want what everyone else wants: a nicely updated and remodeled home in a good area with no “issues”.  (Issues meaning things like high voltage lines, busy roads, flood plains, or being too close to stores or spots not everyone wants to be near.)

How many FHA buyers are successful in purchasing a house right now?  The percentages are very small.  Just now I ran the MLS for sales of single family homes (houses and duet homes) in San Jose over the last 30 days.  Here are the figures:

All closed sales = 368

What kind of financing was used for these 386 closed sales?

Conventional financing = 268
All cash purchases = 77
FHA purchases = 10
Conventional 1st & 2nd loans = 6
VA Loan = 1
Owner financing = 0

The odds of success for FHA buyers is less than 3%.  Why is it so tough?  Condos are even more challenging than houses, so let’s look at those issues first.
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