The overall structure of the property must be in good enough condition to keep its occupants safe. This means severe structural damage, leakage, dampness, decay or termite damage can cause the property to fail inspection. In such a case, repairs must be made in order for the FHA loan to move forward.
Common Safety, Soundness And Security Issues
Here are a few common issues that would disqualify a property from an FHA loan. Electrical: The electrical system must be up to code and provide adequate lighting. Heating: The heating systems must follow the local code and provide a comfortable temperature.
FHA appraisal and inspection checklist
Must have an undamaged exterior, foundation and roof. Must have safe and reasonable property access. Must not contain loose wiring and exposed electrical systems. Must have all relevant utilities, including gas, electricity, water and sewage functioning properly.
Passing an FHA home inspection is harder than passing other types of home inspections because if the inspector identifies serious problems with the property, those problems will have to be dealt with before you can secure a loan.
If anything major happens that could affect the safety or health of an occupant, the appraisal is failed, and the issues need to be rectified before the mortgage can close. This could be anything from exposed floorboards, missing handrails to chipping paint in a house built before January 1, 1979.
FHA appraisers consider value, but they must also confirm that the home conforms to its minimum property requirements, which include safety and other issues — for example, the absence of lead paint and properly functioning appliances.
FHA appraisal guidelines tend to be more stringent than conventional appraisal rules, but they also come with extra protections worth knowing if you're buying a home with an FHA loan.
The appraiser will spend anywhere from 45 minutes to several hours evaluating a home. Once the appraisal has taken place, the report is usually complete within 7 to 10 business days.
An issue of soundness is one where physical issues or conditions affect the structural soundness of the home. Minor or cosmetic issues liked cracked windows, badly soiled carpet, and plumbing leaks often won't hold up the closing process, but required repairs will most likely have to be made before closing.
Potential Red Flags Inside the House
On top of that, old wiring doesn't always accommodate large, modern appliances. Running appliances on fuses that can't accommodate them is highly dangerous. Mold: Mold and water leaks are usually found together, and neither are a good sign.
Water pressure must be adequate for the house. Appraisers flush toilets, turn on all faucets and ensure that both hot and cold water are working.
Despite the lenient FHA loan requirements, it is possible to be denied. The three primary factors that can disqualify you from getting an FHA loan are a high debt-to-income ratio, poor credit, or lack of funds to cover the required down payment, monthly mortgage payments or closing costs.
The appraiser will run the water and flush toilets. Electrical: No exposed wires, no missing knockouts in the electrical panel. If you are looking at a home with old wiring such as knob and tube, it will not pass the appraisal. If you are looking at a home with a fuse box, it is questionable.
What is required for FHA loan qualification? First, we'll give you a quick overview, then we'll drill down into each of these FHA loan requirements: Credit score: Minimum credit score of 580 (or 500 with a higher down payment) Down payment: 3.5 percent (or 10 percent with a credit score between 500 and 579)
FHA is instructing lenders to provide a second independent property appraisal in cases where FHA determines there may be inflated property valuations.
Closing in 30 days is ideal, but it's usually only possible if the buyer's financial readiness isn't a barrier and no issues are discovered during the appraisal and inspection of the seller's home. Standard mortgage loans took an average of 49 days to close in September 2021.
The answer is no, the FHA does not require an inspection, but it does require an appraisal. It may sound like I just negated my answer because we use these words interchangeably in everyday speech, but to the FHA, an inspection and an appraisal are two very different things.
Under “Minimum Requirements for Living Unit,” Handbook 4000.1 states that a living unit must have a kitchen which includes, at a minimum, “a sink with potable running water and a stove utility hookup.” In other words, a stove is not necessary, but a stove hookup is.
Part 2 - The 91-180 day flip rule
It states that if there sale date of the property falls between 91-180 days following the seller's acquisition of the property, AND if the property is being sold for 100% or more over the price paid by the seller to acquire it, then a second appraisal of the home is required.
All chipping, peeling paint MUST be scraped and painted. This includes interior, exterior, garages, sheds, fences, etc. This is a common FHA repair for homes built prior to 1978. Any useful components (appliances, floor covering, etc.)
What kinds of mess can affect a home's appraisal? Appraisers are trained to overlook clutter. Stray clothes, scattered toys, unwashed dishes, unmade beds, disorganized closets, and other items that suggest you actually live in your house should not affect an appraisal if they don't affect its structural integrity.
This program is available through FHA-approved lenders. It allows homebuyers to finance the purchase of a home or homeowners to refinance a current mortgage, combining the cost of renovations, repairs, or remodeling into a single loan.
One of the top factors in your home appraisal will be the local real estate market. Comparables tell the story of how other homes are selling, and they tell the history of purchase price and appreciation or depreciation of home values.