Sellers call me sell my house fast when the clock is ticking. Job transfer, divorce, inherited property with a leaky roof, looming foreclosure. Then the kicker: the home still has an FHA loan. They’ve heard the pitch from postcards and yard signs, we buy houses for cash, and they wonder if that even works when a government-backed mortgage sits on title. The short answer is yes, you can sell a home encumbered by an FHA loan to a cash buyer. The longer answer is where most people save thousands of dollars and weeks of stress.
FHA loans carry a reputation for extra strings, mostly because they’re designed to help buyers with smaller down payments and because the FHA insurance fund has specific rules. For sellers, those rules mostly show up when the buyer uses a new FHA loan. If the buyer brings cash, the FHA guidelines for the buyer don’t apply. What still matters are payoffs, title, and timing. Let’s unpack the moving parts so you can decide whether a cash sale makes sense or whether a traditional listing will net you more.
What an FHA loan means when you’re the seller
An FHA loan is a mortgage insured by the Federal Housing Administration. You don’t have a contract with FHA directly; your lender does. That’s why, from your side, the sale mechanics look like any other payoff: the escrow company requests a payoff quote from your servicer, collects that amount from the buyer’s funds at closing, sends it to your lender, and clears the lien from title. The FHA insurance never blocks you from selling.
Here’s what does change with FHA loans, and what doesn’t, based on real transactions I’ve shepherded through closing.
- The payoff math can include a small daily interest accrual plus any unpaid escrow advances, late fees, or recoverable corporate advances. FHA loans used to be notorious for collecting interest through month-end, but that policy changed years ago for new notes. If your note dates back a decade or more, your payoff might still reflect quirky interest calculations. Ask escrow for a detailed payoff breakdown early. FHA loans may carry Mortgage Insurance Premium (MIP). The upfront portion was financed into the loan, then you pay annual MIP monthly. There’s no “refund” at sale unless your loan is young enough and qualifies for a partial upfront MIP refund, which is rare in older loans. Don’t count on that as a credit. Prepayment penalties are uncommon on FHA loans originated in the last 10 to 15 years. If your note is older, double check. Ninety-nine times out of a hundred, there is no penalty, but that hundredth time hurts. Assumability exists, but it’s not the norm. FHA loans are technically assumable, which can be attractive if you locked a 3 percent rate and buyers face 7 percent. Assumptions require lender approval and time. In a sell my house fast situation, you probably won’t wait 60 to 90 days to process an assumption unless the price premium justifies the delay.
The upshot: for a cash sale, your FHA loan is just a lien to be paid off. The rest of the details hinge on property condition, your timeline, and your equity.
Why cash buyers appeal when speed or certainty matters
The phrase we buy houses for cash tends to polarize people. Some swear by it, others swear at it. I’ve seen both outcomes. The better cash home buyers solve specific problems: tight timelines, homes that need major repairs, tenants who won’t cooperate with showings, probate complexities, or a seller who wants one walkthrough, one contract, and a guaranteed closing date.
In 2022 I advised a seller with hail damage and half-finished kitchen cabinets. An FHA buyer couldn’t get the loan cleared because the appraiser flagged peeling paint and missing appliances. We spent four weeks buy houses for cash patching issues to appease underwriting, then the buyer’s interest rate lock expired and they walked. A local buyer who advertises we buy houses for cash closed in seven days. The price was 8 percent lower than the MLS list, but after repair costs, double mortgage payments, and the second round of carrying costs, the cash offer netted more.
That calculation, not the postcard pitch, should drive your decision.
Selling with an FHA loan to a cash buyer: what actually happens at closing
Mechanically, a cash closing with an FHA payoff is boring in the best way. Title opens. The buyer deposits earnest money. Escrow orders your loan payoff from the servicer and clears any other liens or judgments. If you have HOA dues, unpaid utility liens, or city violations, those get handled as well. On closing day, the buyer wires funds, escrow pays off your FHA loan and other closing charges, and you receive the net.
A typical timeline for a clean title with a cooperative lender payoff is 7 to 14 days. When the payoff department drags its feet, add a few days. I’ve seen same-week closings when the seller can upload the payoff authorization immediately and the servicer responds within 24 hours. I’ve also seen rural properties with ancient septic permits take three weeks because the county needed to sign off on a repair escrow. The FHA status of your loan never caused the delay.
If you hear a cash buyer say they can’t buy because of your FHA loan, that’s usually a sign they are wholesale assigning the contract rather than closing with their own funds. A true cash buyer doesn’t care what loan sits on title; they care about the payoff amount and whether the property pencils out after repairs.
Will the FHA 90-day flip rule affect your sale?
This question pops up often. The 90-day rule belongs to FHA buyers, not sellers. FHA prohibits new FHA financing for buyers on homes resold within 90 days of the seller’s purchase, with limited exceptions. If you sell to a cash buyer, they can close anytime. The rule might affect your buyer’s exit strategy if they plan to resell quickly to an FHA-financed retail buyer. Experienced investors factor this in by holding the property longer, selling to a conventional buyer, or adding documentation for the 91 to 180-day window where second appraisal and value justification can apply. From your side, it doesn’t stop your sale.
Pricing reality: how cash investors value your house
When an investor says we buy houses for cash, they are buying a future profit stream. Their offers reflect what they can resell or rent for after fix-up, minus renovations, financing, holding costs, closing costs, and a margin for risk. There’s a simple back-of-the-napkin formula many use called the MAO, or maximum allowable offer. It often looks like 70 to 85 percent of the after-repair value, minus repairs. In hotter markets with low inventory, I’ve seen strong operators push to 85 or even 90 percent for light-repair homes.
Example: if your house would sell for 400,000 fixed up, needs 40,000 in work, and the investor targets 80 percent of ARV, their offer might cluster around 280,000 (0.80 x 400,000), minus 40,000 repairs, or 240,000. Add 10,000 in holding and closing costs plus a 15,000 profit target, and you land near 215,000 to 230,000. If that number makes you wince, you probably have the time and condition to list on the open market. If your kitchen ceiling is on the floor and the bank is knocking, the certainty may be worth it.
Remember, you can always test the market. I’ve had sellers take a cash contract with a 10-day inspection window, continue light prep and staging, then cancel within the contingency period if a retail buyer appears at a materially higher price. The key is transparency with the investor and clean contract language that allows you to move without penalties.
Assessing equity when you still owe on an FHA loan
Before you chase a fast sale, pull your numbers without emotion. Start with your payoff quote. Do not rely on your last statement balance. The payoff adds daily interest and any escrow adjustments. Then get a reasonably accurate after-repair value from a local agent or by studying comparable sales within a half mile, closed in the last 90 to 120 days, similar size and age.
Subtract your payoff and expected closing costs, which for a cash sale run lower than a retail sale. On investor deals I see seller-paid closing costs anywhere from 0.5 to 2 percent of the price, often less because there’s no buyer loan origination, appraisal, or lender fees. In a traditional listing, you’ll add agent commissions, buyer concessions, and inspection repairs.
If your equity is thin, even a clean cash deal might barely cover your FHA payoff. It still can work, but expect less flexibility if title shows additional liens. Municipal utility liens, unpaid child support, old contractor judgments, IRS tax liens, or unresolved solar leases can absorb tens of thousands of dollars from your net. A reputable cash buyer will surface these early and tell you what can be negotiated.
What “as is” means with cash offers
Most cash buyers will present an as is contract. In practical terms, that means no repair requests and a price that reflects the condition. It does not mean you can hide defects or skip the disclosures required in your state. If the roof leaks or the basement floods each spring, disclose it. I have seen sellers try to outrun a disclosure problem only to get a demand letter after closing. Cash does not erase liability for fraud.
The better outfits will handle junk removal, optional leasebacks so you have a week to move after closing, and flexible closing dates. If the offer number is lower than you hoped, ask for non-price terms that matter: no cleanout, a two-week rent-back at a nominal rate, or a closing aligned with your next purchase.
Items to watch in a cash contract
You only need one short list in this piece, so here it is, the provisions I circle with a red pen:
- Proof of funds that shows real cash, not a preapproval. A short inspection period, seven days or less, with limited access expectations. A clear assignment clause. If they plan to assign, fine, but cap the assignment period and require your written consent. Earnest money that goes hard after inspection, ideally held by a neutral title company. Specific closing date with an option to extend only if the payoff or title curative delays closing, not just because the buyer needs more time.
Those five points tell you whether you’re dealing with a buyer who closes or a daisy chain of wholesalers hoping to find one.
What about foreclosure or forbearance?
If you’ve fallen behind on payments, you can still sell with an FHA loan, even late in the default timeline. The payoff will include arrearages, and you might see corporate advances for property inspections or attorney fees. If a foreclosure sale date is scheduled, escrow and the buyer’s title company can request a postponement once a signed contract is in place and payoff is confirmed. Some servicers grant short postponements; others hold firm. I’ve stopped auctions two days before the sale with a letter of intent and earnest money in escrow, but I’ve also watched a sale go forward because the investor filed at the county and would not pull the date.
If you are in a COVID-era forbearance, make sure you understand whether the skipped payments were deferred to the back of the loan or require a lump-sum cure. The payoff will clarify this. I’ve seen sellers surprised by a payoff 10,000 to 20,000 higher than their mental math due to escrow shortages and assessed fees. Better to learn that at the start than at the closing table.
Taxes, MIP, and your net proceeds
Selling triggers tax questions. The FHA label doesn’t change capital gains rules. If you lived in the home two out of the last five years, you may exclude up to 250,000 in gain if single or 500,000 if married filing jointly, subject to IRS rules. If it was a rental, depreciation recapture applies. In one case, a landlord thought a cash discount erased his tax exposure, but the IRS looks at gain, not sales method. Your closing statement will show prorated property taxes, HOA dues credits, and the FHA loan payoff with accrued interest. Keep that statement; your tax preparer will need it.
As for MIP, sellers sometimes ask if they get a refund of monthly premiums paid. Those were part of your monthly payments and are gone. The only potential refund relates to the upfront MIP if you refinance from one FHA loan to another within a certain timeframe, not when you sell to a cash buyer.
Title cleanup surprises and how to handle them
I once had a tidy ranch home that looked like a slam dunk. Then title found two old mechanics’ liens from a roof job during the previous owner’s tenure and a city abatement lien for a weed cleanup from three summers ago. The seller had no idea. The investor could have demanded a steep price drop. Instead, we negotiated a split: the buyer covered the smaller lien to keep the closing on track, and we paid the abatement from proceeds. Good cash buyers want deals to close, not die. They also understand when a lien can be negotiated down. City nuisance liens sometimes settle for 50 to 70 cents on the dollar if you ask early and bring a closing date.
Solar leases and PACE loans are a different animal. Those encumbrances sit on title and either transfer or get paid off. Read your solar agreement. Many investors will not assume a solar lease on a flip, but some will for a rental. If payoff would swallow the deal, we pivot to a retail listing or to a buyer who values the panels.
When a retail sale beats a cash offer
Not every seller who wants to sell my house fast needs a cash buyer. If your home is clean, systems work, and you can tolerate two weekends of showings, a traditional listing can produce multiple offers, even in a balanced market. A conventional buyer with an appraisal waiver, strong down payment, and a 21-day close can feel almost like cash. You’ll still get an appraisal sometimes, but if you price correctly and comps support the number, the gap isn’t huge.
Think in ranges, not absolutes. If a cash buyer offers 320,000 with a 10-day close and no repairs, and your agent projects 355,000 on the MLS with two weeks of showings, potential inspection repair credits, and a 30 to 45-day escrow, which outcome fits your life? The math depends on your carrying costs, your appetite for uncertainty, and whether an extra month of stress is worth the delta. For some, absolutely. For others, the right number is the one that lets them sleep.
Vetting the “we buy houses for cash” pitch
I keep a mental scoreboard for investor buyers. The good ones answer their phones, use standard contracts with state disclosures, and close with their own funds or a verified hard money lender. The sketchy ones send a lowball text sight unseen, lock you up with a long inspection, then retrade the price when they find “issues” that were obvious from the first walk.
Ask for addresses of recent purchases they closed in your city this year. Call the title company they used and ask if they actually wired funds or constantly assigned contracts. Check the LLC against your state’s business registry. The better buyers will offer references without getting defensive. If they get cagey, your instincts are right.
The scenario that trips sellers: equity plus second liens
Here’s an edge case that causes last-minute drama. You have equity, maybe 70,000. You also have a Home Equity Line of Credit from years ago with a 35,000 balance, and a judgment from a past credit card dispute that snowballed to 18,000. Your FHA payoff is 250,000. The investor offers 320,000. That math leaves 17,000 before closing costs. After escrow fees and prorations, you net close to zero. If you need cash to move, this feels like a trap.
Two strategies help. First, ask the buyer for a seller credit toward moving costs, maybe 3,000 to 5,000, to be paid outside closing or as a post-closing occupancy agreement. Second, talk to the judgment creditor about a short settlement funded at closing. Many accept half if you show a closing statement proving limited equity. None of this is guaranteed, but it’s common enough that it’s worth trying.
How to run a quick, honest comparison
You have space for one more short list, so use it to simplify the decision:
- Determine your net from a cash offer by asking the buyer for a draft closing statement. Verify the FHA payoff with your servicer. Price a retail sale net with your agent, including likely inspection credits and days on market. Assign a dollar value to time and risk. If a 25,000 difference buys you three weeks and certainty, is it worth it? Consider non-price terms you care about, like a rent-back, no cleanout, or selling with a tenant in place. Decide based on your numbers, not someone else’s rule of thumb.
That exercise takes an afternoon. It removes the guesswork and the pressure of slogans.
Special note for inherited properties with FHA loans
If you inherit a home with an FHA mortgage and you’re the personal representative, you can sell even if probate is ongoing, as long as your state allows a sale with court approval or you have independent administration powers. Notify the servicer that the borrower passed and that a sale is in process. Many servicers pause collection calls once they see letters testamentary or a personal representative order. Cash buyers often accept probate timelines and will write the contract “subject to court confirmation” if needed. On one estate, the buyer put up a 5,000 nonrefundable deposit pending court approval. We closed 45 days later after the confirmation hearing, the FHA loan paid in full.
Final thoughts from the trenches
If you remember nothing else, carry this: an FHA loan does not block you from selling to a cash buyer. The loan is a lien to be paid, nothing more. The meaningful questions involve your equity, your timeline, the property’s condition, and the reliability of the buyer sitting across the table. The companies that market we buy houses for cash are not all alike. Some are neighbors who know the streets and close on time. Some are lead generators who never intend to buy.
When speed and certainty are worth more than squeezing every last dollar, a cash sale can feel like a pressure valve releasing. When you have time and a home that shows well, the open market will usually pay you more. Either path works with an FHA loan. Pick the one that fits your situation, back it with clear math, and hold your buyer to a clean contract. That combination, not a catchy slogan, is what gets you to a stress-free closing day.