FHA loans are a popular type of mortgage that is often used by first time home buyers. The low down payment requirement and easier credit guidelines are both issues that attract borrowers to choose FHA. While it is FHA’s mission to make homeownership affordable for consumers, it is also their concern that a home be a safe and secure place to live. For this reason, there are specific home condition requirements for FHA loans.
FHA has minimum property standards that are in place to include the safety, security and soundness of the home. The home that a borrower is interested in purchasing must not have any deficiencies or conditions that will affect the sturdiness of the building. The home must be able to protect the safety and health of any and all occupants.
When a borrower applies for an FHA mortgage, the process will include that an appraisal be performed. The lender must use an FHA approved appraiser for this purpose. It is the duty of the FHA appraiser to examine the property and report what he finds on the FHA appraisal. This includes any necessary repairs, renovations or deterioration. There are some deficiencies that FHA does not require to be repaired before closing. These include cracked glass, defective paint, worn flooring, doors that are damaged, worn out counters, minor plumbing issues, walls or ceilings with damaged plaster.
On the other hand, FHA does require that certain items be remedied to meet FHA approval in order to close. These issues include replacing any electrical boxes that have exposed or frayed wires, a heat source in every room, the water heater must meet local building codes, there must be safe and adequate access to the property including from the road, a toilet, sink and shower must be present, and a professional must inspect any hazardous materials that are found.
The appraiser is also required to look in the attic in order to determine any roofing issues that may be present. For an FHA loan, the roof must be expected to last at least 2 years and must be able to keep moisture out during that time frame. The roof is limited to no more than three layers of roofing. The property conditions and location are also considered for potential hazards such as soil that has been contaminated by oil and gas wells, the distance to hazardous waste sites, airports or other areas of noise, the distance to high voltage power lines, radio and TV transmission towers. Structural deficiencies or conditions that can lead to future damage must be also be repaired before closing. These include leakage, decay, termites and dampness.
While the FHA appraisal may appear to be strict, the property condition stipulations are there to protect the borrower who is looking for a pleasant and healthy place to live. FHA does not want the home buyer to purchase a home that reveals costly problems after the closing has taken place. For most home buyers, it is easier to find a different, more suitable home before closing that to have the funds available for repairs after closing.