With lenders nationally pulling back and getting more restrictive in their mortgage lending policies, the FHA, Federal Housing Administration, has steadily been picking up a larger percentage of mortgage loans. With FHA down payments being lower, and credit requirements less restrictive, many home buyers are turning to the FHA for mortgages. It's good that this avenue exists, but every borrower should be aware of a couple of possible snags, and how they can be avoided or fixed in the mortgage process.

Property Condition Problems - The FHA wants the home you buy to be in totally livable condition at closing. Small things like broken windows or torn screens shouldn't present a problem, but larger problems that the seller refuses to correct will stop a deal. In the case of a great deal with up to $35,000 in repair issues, an FHA 203K loan can be used, allowing the repairs to be done before closing and financed in the deal.

Appraisal is Too Low - With so many short sales and foreclosures, sometimes an appraiser has trouble finding comparable sales that will result in the appraisal coming up to the agreed-upon price. In this case, it could be a good deal for the buyer. The seller will not be able to sell to anyone needing financing at the asking price, so just renegotiate a lower purchase price to meet the appraisal. This will result in lower payments on the home you desire.

If an FHA loan is probable for your next home purchase, keep these snags in mind, and have a plan ready to deal with them.