We're seeing a few more FHA mortgages this year. They had fallen out of favor during the boom years. And, for buyers it's a great thing that they're back.

The benefits to buyers are a reduced requirement for down payment (3%), lower loan costs, easier qualification and, some additional home inspection protection.

There are some down sides if you're a seller, however.

The big one is the FHA appraisal. This is not your standard appraisal where the appraiser is looking at the market value of the home. It is that; but it is also another home inspection. A transaction can sail right through the home inspection contingency with no issues. Then the FHA appraiser looks at the house and decide that there's a problem that MUST BE FIXED before settlement can occur.

Unlike with the normal home inspection, this is not a negotiation. If the seller finds himeself unwilling or unable to complete these repairs, the deal is usually dead.

The home inspector may have thought the roof was in perfectly good condition. The FHA appraiser can decide that the roof needs to be replaced.

If you're the buyer, this can be terrific. The FHA is trying to prevent you from having to buy a new roof shortly after you've bought a home.

If you're the seller, you may not be as thrilled.

The other, much smaller issue, is that there are some fees associated with a settlement that the FHA will not allow a buyer to pay. Typically these are small amounts and I've never seen this jeapordize a transaction.

You can see why, when houses sold like hot cakes, it was hard for anyone to buy a home with an FHA mortgage. If there are several offers, I'd likely advise my seller client to choose the non-FHA offer.

Still, in this market, if the only offer you've got is one with an FHA mortgage, I'd say grab it and keep your fingers crossed!