Only homes that meet FHA safety guidelines can be financed with an FHA loan. However, if the home you want to buy doesn't pass the inspection, you can apply for a 203(k) rehabilitation mortgage. 203(k) loans, which cover the home purchase and rehabilitation, provided the renovation or full reconstruction exceeds $5,000. In some cases, you may be eligible to demolish and rebuild the house if the original foundation is still in place.
If the home repairs cost less than $5,000 or the home fails to pass the inspection, you could try making a deal with the seller to have them make the repairs on the condition that you won't pull out of the transaction.
If you've had a foreclosure in the past and you want to buy a home, you may face some obstacles.
You usually have to wait seven years from the end of the foreclosure proceedings to apply for a conventional mortgage. However, with an FHA loan, you only need to wait three years after a foreclosure to apply.
