Under the HARP (back to work) program, FHA can be an attractive loan vehicle for those who have had credit challenges, foreclosures or bankruptcies. So what happens when the houses that meet the prequalification criteria are in such poor condition that they would be difficult to pass the FHA appraisal standards? If the Seller is in a position to make the necessary repairs, then that would solve the problem. But how often does that happen? If the house is in that “magic” price point, often the Seller cannot make those repairs. So, what are the solutions? If the Buyer is in a position to make those repairs, with the approval of the Seller, that could help. But, again, many FHA Buyers are barely scraping together the 3½% down payment, so that may not be possible. The Buyer may make a higher than listing price offer and request repairs. Takes some trust between the Buyer and Seller to get those repairs made ahead of the close of escrow. As a third alternative, I often suggest to such clients to talk with their lenders about an FHA 203(k) loan, which would allow those Buyers to include the cost of repairs in the loan. Yes, that will increase the monthly payment, but it may be the only way those Buyers can make that purchase and become the homeowners they want to be. Talk it over with your clients and find out which of these solutions works best for them.