Some people with FHA loans have their housing market closed

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One of the hottest housing markets in recent years has been shutting down access to some people using federal home loans.

When would-be home buyer Shay Morris qualified for an insured FHA loan earlier this year and began looking for a home, she quickly realized how difficult it would be.

“I saw the house every day, but then I was just upset because I knew I really had no chance of winning when you talk to realtors and other real estate agents,” Morris said.

With the demand for homes in Indianapolis growing rapidly, it is not uncommon for dozens of offers to come in immediately after a home is listed. As a result, some sellers only ask for cash or regular loans.

Amy Nelson, executive director of the Central Indiana Housing Fair Center, said some sellers also favor buyers who can pay the additional costs, creating a disparity.

“Unfortunately, for them, the best deal is someone who doesn’t require them to do much more on their part, and they make the most money with the least constraints,” Nelson said.

Nelson said she has seen over 200 lists in Marion County that list regular loans rather than federal programs.

FHA loans were created to increase home ownership by allowing buyers to have lower down payments and lower credit ratings. Nelson said that historically loans have been beneficial.

“In the vast majority of cases, this benefits black and brown communities who are often excluded from the home buying process due to generational loss of wealth,”

In this market, people with FHA and VA loans find disadvantages. FHA loans require an appraisal and review to ensure a safe home. Often, buyers with conventional loans can cover additional costs and offer higher down payments than buyers with FHA loans cannot. Morris experienced this.

“I just don’t have that kind of money,” Morris said, “like the first home buyer sitting in the bank. I do not have a current home that I could use as my own capital. “

Morris has suspended her search for the time being, having lost the capital she is trying to build.

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