There are few reasons why sellers will either not accept buyers with FHA loans. First reason is that this is much longer and more complicated process than with conventional loans. Second is the risk which home sellers are facing of taking house off the market for a month or longer
(with recent regulations effective July30, 2009 it is recommended to have closing date of at least 30 days from effective date of the contract.For FHA loans it may take even 2 months) and if house is not sold then home sellers lost not only valuable time, but also have no any recourse toward home buyers, because accepting buyer's offer with FHA loan, home sellers are obligated to sign FHA/VA Amendatory Clause which says " It is expressly agreed that, nothwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise unless the purchaser has been given in accordance with HUD/FHA or VA requirements a written statement issued by the Federal Housing Commissioner, Department of Veterans Affairs, or a direct endorsement lender, setting forth the appraised value of the property of not less than $..... (here goes the sales price of the house). The purchaser shall have the privilege and option of preseeding with the consumation of the contract without regard to the amount of the appraised valuation....."