Are shared equity homes eligible for FHA financing?

Yes.  FHA rules (24CFR Section 203.41) specifically allow restrictions imposed by government or nonprofit affordable housing programs intended to preserve affordability.  The rule explicitly allows restrictions on resale price, requirements that homes be resold only to income-qualified buyers and requirements that owners occupy their homes as their primary residence.  Sponsors are also permitted to make loans which require sellers to repay a share of market price appreciation.  However, several issues in the language of this rule, interpretation of the rule in a subsequent mortgagee letter (94-2) and inconsistent interpretation of both by regional FHA staff have meant that many shared equity homeownership programs have not been able to take advantage of FHA insured mortgages.