Does the seller have to agree to an FHA loan after the contract has been signed?
QUESTION: My seller signed a contract with a buyer who represented that they intended to obtain a conventional loan to fund the purchase. Several weeks later, the buyer agent sent me an FHA/VA Financing Addendum, because the buyer wanted to obtain an FHA loan instead. I told the buyer agent that the seller did not wish to sign the addendum. The buyer agent got very upset and accused me of making a misrepresentation in my listing, which did indicate that the seller would consider an offer with an FHA loan.
Does my seller have to agree to amend the contract to allow an FHA loan? Did I make a misrepresentation in my listing?
ANSWER: No, the seller does not have to agree to an FHA loan in this case, and no, it does not sound like you made a misrepresentation in your listing.
In the “Buyer Representations” section of the Offer to Purchase and Contract (Form 2-T), the buyer informs the seller of the type of funds the buyer intends to use in the transaction. The buyer’s representation must be made in good faith, and if a buyer misrepresents their intent, a seller may pursue remedies for a material misrepresentation. Form 2-T makes clear that any change in the type of funds used by the buyer is a material fact that must be promptly disclosed to the seller or listing agent.
In most cases, the buyer may change the type of funds used if they are acting in good faith, so long as they can meet the contract’s deadlines (which the seller has no obligation to extend). In your case, however, both FHA and VA loans require the FHA/VA Financing Addendum in order for a buyer to qualify. Once Form 2-T becomes effective, it is binding as “the entire agreement of the parties.” If the addendum was not attached to the original contract, then signing it now would be an amendment that the seller is not obligated to accept. This means in your case, the buyer can either complete the purchase another way without an FHA loan, or they can choose to terminate.
As for your second question, a listing is a solicitation for offers. It is not, in itself, an offer. While your listing may have indicated that the seller was open to seeing an offer that contained FHA financing, that is not the offer the buyer made and your seller accepted. A listing soliciting offers does not bind the seller to change the contract once it is effective.
Release Date: 04/17/2025
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