Can I sell my home with owner financing when I still have an FHA loan? (and should I?)
You have to pay off the balance on the loan first. Also, FHA loans are not supposed to be used for rental properties. I don't know how you living there for a number of years changes things or how often is that rule enforced but you might need to refinance even if you rent it out.
"I am a bit confused here as to how a 4K loan will negatively effect your credit score if payments are made on time.  FICO scores are based upon how well you borrow.  If you borrow, pay back on time, your score will not go down.  Perhaps a bit in the short run when you first secure the loan, but that should come back quickly.  In the long run it will help improve your score which seems like it would be more important to you. Having the provider finance your loan will probably not show up on your credit unless you fail to pay and they send to collections. If the score is so important to you, which I think is somewhat unwise, then use a credit card.  With a 750 you should be able to get a pretty good rate, but assume it is 18%.  In less then 9 months you will have it paid off, paying about $293 in interest.  You could consider that a part of the cost of doing business for maintaining a high credit score.  Again not what I would advise, but it might meet your needs. One alternative is go with lending club.  With that kind of score, you are looking at 7% or so.  At $500 a month, you are still looking at just over 8 months and paying about $100 in interest.  Much less money for improving your credit score. Edit based upon the comment: ""My understanding is that using a significant portion of your available credit balance is bad for your credit, even if you pay your bills on time."" Define bad.  As I said it might go down slightly in the short term.  In three months you will have almost 33% of the loan paid off, which is significantly lower then the original balance.  If you go the credit card route, you may be approved for quite a bit more then the 4000, which may not move the needle at all.  Are you planning on buying a home in the next 90 days?  If not, why does a small short term dip matter?  Will your life really be effected if your score goes down to 720 for three months? Keep in mind this is exactly the kind of behavior that the banks want you to engage in.  If you worship your FICO score, which gives no indication of wealth then you should do exactly what I am suggesting." I'll write this up as a more formal answer, here. I'd suggest looking into a Home Equity Line of Credit, or HELOC. You didn't mention in your question how much equity you have in the home, but assuming at least 20%, you might be able to open a HELOC with a line of $40,000. My experience is that you can do 50% of your equity, but depends on the bank. Here are a few notes that are generally in play with HELOC's (YMMV, so be sure to know the specifics before signing on the line) Doing this, at least when we did 8 years ago, did not subject us to PMI. There are certainly plenty of things to research, but it sounds like you're pretty astute based on how you're evaluating the financial side of this endeavor. There are no guarantees in real estate. Houses could be selling like crazy now, but in 6 months they might not. It certainly sounds like that's a lower risk in your area, but you never know what might happen. If you're taking on this extra line of credit, make sure that it's something you could afford should the worst case scenario happen.  Equity loans are also available. This is a more traditional fixed-rate loan rather than line of credit, so you'd be looking at set monthly payments rather than the flexibility of paying interest only when you need to. There's a brief write-up on the differences here. I have also heard of a construction loan, which falls into the same category as the aforementioned options, but I can't speak to today's market on those. "If you sell the property before the ten years are up, the panels might have declined in value more than the amount you owe declined.  In the original post's situation, this is a negligible risk. Suppose (for the sake of argument) that each year's panels are 10% better than the previous year's panels.  Even if the panels lasted forever, and even if the price you could sell the power for stayed the same, then the value of your panels should decline 9% per year.  If the panels are financed at a 4.5% APR for 10 years, your principal should decline by 8.1% in the first year. A second risk is that the solar panels might be ugly, or might go out of fashion.  When selling a home, ""curb appeal"" matters.  If potential buyers do not like how your home looks with the solar panels, you might not be able to get as much money for the house if you have to sell it. A third risk is that the loan might harm your credit rating, or otherwise restrict your ability to borrow.  Even though this deal does not impinge on your disposable income, a bank might think that it raises your debt-service-to-income (DTI) ratio.  This could theoretically prevent you from refinancing your home, or raise the interest rates on potential loans you might want to take out. A fourth risk is that the installation process might damage your home in a way that causes expensive damage.  Water leakage and electrical fires can potentially destroy homes.  You need to have the solar system competently installed. A fifth risk is that the solar power system might make it harder to maintain or replace your roof.  Will your roof need to be replaced during the life of the solar power system?  If so, consider options that do not force you to throw away the solar power system prematurely." I'm glad you didn't say they were the only causes of the bubble, and I hope you didn't mean to.  But I won't argue that those were not partially to blame.  I also won't say I personally was not partially to blame.  Now, I certainly don't want to defend the banks, at least not a lot of them, but I disagree with some of your assertions. For one thing, they are getting blamed for making loans to readily available, and now they are being blamed (not by you) for **not** making the money readily available.    Have you financed any homes?  If so, did you just go to a bank and get a loan?  I'm sure some people do that, but I don't know anyone who ever has.  I go to a loan agent, and get a much cheaper loan.  And I think part of the problem is that many of these agents have only one overriding objective - to enable you to qualify for a loan, so they can get their commission.  They know all the rules and reasons people get turned down, so they play the system and get people loans who should not get them.  I don't really think the banks are blameless, as they allow this, and in many cases, know about it (unofficially).  But I don't think it's a conspiracy by the banks; I think the banks were simply naive and thought that the past was a good indicator or the future, so the loans were safe because they would get the house if the owner defaulted, and the house would be worth at least the value of the equity the owner had after the down payment.  Lots of people made mistakes on both sides.  You can call it a conspiracy if you want, but I've found that most conspiracy theories were simply not real.    Other than that, I totally agree with you.  :) My realtor told me that even though they're only asking for 1/2    the money and have excellent credit that the mortgage company may   not lend it to them if I'm over priced. Is this true? I've never heard of it before. It is a chance, but it is a red herring to the discussion. Having excellent credit has nothing to do with being eligible for a debt object of a specific size. Just because you have excellent credit, would you get approved for a property of $10,000,000 if you only made $35,000 a year (and had no other net worth)? But regarding your potential buyers, a chance vs a good chance is different. Your realtor just told you some basic always true lending fact that has nothing to do with your situation. The article states their reasons pretty clearly, and indicates that some people won't qualify under the new requirements that would have previously, they're not courting people with bad credit, they're just looking beyond credit score at other factors. They aren't opening floodgates for anyone with a pulse to get a car loan, just shifting things a bit to cast a slightly wider net. This is not new in the world of secured debt, the FHA has methodology for establishing a non-traditional credit report based on things like rental history, utility payments, auto-insurance payments, a person can't be declined an FHA loan for lack for lack of traditional credit history. I look beyond credit score as a landlord, a tenant with poor credit but a stellar rental history is more appealing than someone with great credit but a bad rental history. Vehicles and housing are very important to people, so they are likely to prioritize them above credit card payments or hospital bills. Time will tell, but it seems like a solid move in my view, they can refine their model over time and likely find a solid customer base among those who wouldn't qualify on credit score alone. First, let me say that you have to take everything your agent says with a grain of salt. Freakonomics had a great article that discussed the math behind the motivation of the real estate agent.  It described the home seller, trying to get, say $400K. On a 6% commission, the $24K is destined to be split between seller realtor office and buyer's realtor's office. The selling agent gets $6,000 (or so) in the end. As a seller, if I settle for $380K, my realtor is only out $300, netting $5700. But $20K lower sale price, and I just lost nearly $19K after commission is paid.  The agent would have the natural goal of volume, not extracting the last dollar from the buyer. Gaining back the last $20K to the seller will cost the realtor far more than $300 in her time, keeping the house on the market and waiting for the better offer.  Sellers might use down payment as one way to estimate the probability of the financing falling through, but it's a rough estimate at best because, in the case of bank financing, the bank needs the same time to run through the paperwork for a 3% down or a 20% down. It's just as easy for the buyer to qualify or not qualify for one loan or the other. There are young couples with great incomes and no debt, who blow away the required ratios for proposed debt to income, but haven't saved up the otherwise huge 20% downpayment. Then there are those who have saved for years, even having 30% to put down, but their income is still not going to qualify them. The offer will be contingent on the financing, regardless. It will show that you are putting $XX dollars as a downpayment, and the final transaction is contingent on your bank approving you. "First off; I don't know of the nature of the interpersonal relationship between you and your roommate, and I don't really care, but I will say that your use of that term was a red flag to me, and it will be so to a bank; buying a home is a big deal that you normally do not undertake with just a ""friend"" or ""roommate"". ""Spouses"", ""business partners"", ""domestic partners"" etc are the types of people that go in together on a home purchase, not ""roommates"". Going ""halvsies"" on a house is not something that's easily contracted; you can't take out two primary mortgages for half the house's value each, because you can't split the house in half, so if one of you defaults that bank takes the house leaving both the other person and their bank in the lurch. Co-signing on one mortgage is possible but then you tie your credit histories together; if one of you can't make their half of the mortgage, both of you can be pursued for the full amount and both of you will see your credit tank. That's not as big a problem for two people joined in some other way (marriage/family ties) but for two ""friends"" there's just way too much risk involved. Second, I don't know what it's like in your market, but when I was buying my first house I learned very quickly that extended haggling is not really tolerated in the housing market. You're not bidding on some trade good the guy bought wholesale for fifty cents and is charging you $10 for; the seller MIGHT be breaking even on this thing. An offer that comes in low is more likely to be rejected outright as frivolous than to be countered. It's a fine line; if you offer a few hundred less than list the seller will think you're nitpicking and stay firm, while if you offer significantly less, the seller may be unable to accept that price because it means he no longer has the cash to close on his new home. REOs and bank-owned properties are often sold at a concrete asking price; the bank will not even respond to anything less, and usually will not even agree to eat closing costs. Even if it's for sale by owner, the owner may be in trouble on their own mortgage, and if they agree to a short sale and the bank gets wind (it's trivial to match a list of distressed mortgaged properties with the MLS listings), the bank can swoop in, foreclose the mortgage, take the property and kill the deal (they're the primary lienholder; you don't ""own"" your house until it's paid for), and then everybody loses. Third, housing prices in this economy, depending on market, are pretty depressed and have been for years; if you're selling right now, you are almost certainly losing thousands of dollars in cash and/or equity. Despite that, sellers, in listing their home, must offer an attractive price for the market, and so they are in the unenviable position of pricing based on what they can afford to lose. That again often means that even a seller who isn't a bank and isn't in mortgage trouble may still be losing thousands on the deal and is firm on the asking price to staunch the bleeding. Your agent can see the signs of a seller backed against a wall, and again in order for your offer to be considered in such a situation it has to be damn close to list. As far as your agent trying to talk you into offering the asking price, there's honestly not much in it for him to tell you to bid higher vs lower. A $10,000 change in price (which can easily make or break a deal) is only worth $300 to him either way. There is, on the other hand, a huge incentive for him to close the deal at any price that's in the ballpark: whether it's $365k or $375k, he's taking home around $11k in commission, so he's going to recommend an offer that will be seriously considered (from the previous points, that's going to be the asking price right now). The agent's exact motivations for advising you to offer list depend on the exact circumstances, typically centering around the time the house has been on the market and the offer history, which he has access to via his fellow agents and the MLS. The house may have just had a price drop that brings it below comparables, meaning the asking price is a great deal and will attract other offers, meaning you need to move fast. The house may have been offered on at a lower price which the seller is considering (not accepted not rejected), meaning an offer at list price will get you the house, again if you move fast. Or, the house may have been on the market for a while without a price drop, meaning the seller can go no lower but is desperate, again meaning an offer at list will get you the house. Here's a tip: virtually all offers include a ""buyer's option"". For a negotiated price (typically very small, like $100), from the moment the offer is accepted until a particular time thereafter (one week, two weeks, etc) you can say no at any time, for any reason. During this time period, you get a home inspection, and have a guy you trust look at the bones of the house, check the basic systems, and look for things that are wrong that will be expensive to fix. Never make an offer without this option written in. If your agent says to forego the option, fire him. If the seller wants you to strike the option clause, refuse, and that should be a HUGE red flag that you should rescind the offer entirely; the seller is likely trying to get rid of a house with serious issues and doesn't want a competent inspector telling you to lace up your running shoes. Another tip: depending on the pricepoint, the seller may be expecting to pay closing costs. Those are traditionally the buyer's responsibility along with the buyer's agent commission, but in the current economy, in the pricepoint for your market that attracts ""first-time homebuyers"", sellers are virtually expected to pay both of those buyer costs, because they're attracting buyers who can just barely scrape the down payment together. $375k in my home region (DFW) is a bit high to expect such a concession for that reason (usually those types of offers come in for homes at around the $100-$150k range here), but in the overall market conditions, you have a good chance of getting the seller to accept that concession if you pay list. But, that is usually an offer made up front, not a weapon kept in reserve, so I would have expected your agent to recommend that combined offer up front; list price and seller pays closing. If you offer at list you don't expect a counter, so you wouldn't keep closing costs as a card to play in that situation."