You’re hoping to buy a home using an FHA loan, but did you know that means there are common repairs that can prevent your loan from being approved? Keep this list handy as you’re searching for a new home, so you know which things to look out for!
The 10 of the Most Common FHA Appraisal Repairs according to the HUD Manual 4150.2 have to do with:
- Utilities
- Water Heater
- Electrical Wiring
- Plumbing
- Heating & Cooling Units
- Windows
- Paint
- Pool/Spa
- Miscellaneous Items
- Any Other Condition which risks the health and safety of occupants
Next, let’s look at the FHA loans in more detail to better understand what these FHA requirements are and why they’re in place.
What are FHA Loans?
FHA stands for the Federal Housing Administration. It is part of the U.S. Department of Housing and Urban Development (HUD).
FHA loans are insured loans, allowing mortgage lenders to offer you a better deal, such as:
- Low down payments – as low as 3.5%
- Low closing costs
- Easier qualifying credit score
FHA loans have helped people afford to become homeowners since 1934. FHA has financing options for manufactured homes, mobile homes, and traditional homes.
Note: Not all lenders offer FHA Loans, so be sure to speak with a lender first about which financing options they can offer you.
Do FHA Loans Require an Inspection?
While they don’t technically require a home inspection, FHA loans do require an appraisal that has an inspection component.
An appraisal is a professional analysis used to estimate the value of a property. This includes examples of similar properties. Lenders typically require an appraisal to make sure the loan amount requested is accurate.
The appraisal is conducted by a licensed, HUD-approved appraiser.
➤Visit our real estate glossary to define more common real estate terms.
Why do FHA Loans Have Special Requirements?
Before the FHA-insured financing approves lending money to purchase a home, they want to ensure the home is:
- Safe
- Secure
- Sound
And that’s where home buyers can run into obstacles. It can be a challenge to find a home within your approved loan amount that meets all the requirements for FHA-insured financing.
This list is not meant to be comprehensive or all-inclusive. However, it is a good starting point for what to look out for if you’re trying to buy a house using an FHA loan.
Why Do FHA Loans Take Longer to Close?
Because of the stricter regulations, home sales with FHA financing can take longer to close.
This list of common FHA repairs can be useful for home sellers too, so those trying to sell a house can be aware of things they may need to fix before putting a house on the market or selling it.
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What an FHA Appraiser Looks For and Often Requires Remediation:
Here are some of the most common FHA repairs according to the HUD:
1. Utilities – All systems must be tested and functioning
- Electricity is on
- Water is on
- Gas is on (propane included)
2. Water Heater
- Turned on and functioning
- Adequate gas exhaust ventilation
- PRF (pressure relief valve) installed
3. Electrical Wiring (adequate & not exposed)
- Adequate GFCI (Ground Fault Circuit Interrupter) outlets (bathrooms, kitchens, laundry rooms, and outdoors)
- Main electrical panel (exterior & interior covers)
- Plug/switch covers must be installed
- Fixture sockets must be covered
- No exposed wiring below 8 feet in the garage
4. Plumbing
- Adequate hot water
- Adequate water flow in all faucets and toilets
5. Heating & Cooling Units
- Range/oven is required
- Free standing/Slide-in units are not required
- Dishwater is required (only if a built-in unit)
6. Windows
- Replace broken windowpanes
- Windows must open adequately
- Security Bars – one quick release per room
- Trim for windows and doors
- Missing screens or windows
7. Paint
- Correct chipping or peeling paint (pre-1978)
- No bare wood (must be sealed – paint or sealant)
8. Pool/Spa
- Must be filled with clean water
- Filter must be functional (heater need not work)
9. Miscellaneous Items
- Floor coverings (no bare concrete)
- Roof covering (roof inspection needed if it’s excessively worn or missing shingles)
- Signs of water leaks (stains) on ceiling
- Trash and debris must be removed
- Exposed metal support brackets on patio (cover)
- Standing water (potential health risk)
- Very green (lush) areas in the yard (possible septic leak)
- Adequate smoke and carbon monoxide detectors
- Garage door opener (IF there is one, it must be working and properly adjusted)
- Broken or missing handrails (if there are more than 3 steps), stairs, or exterior doors
- Signs of mold or mildew
- Baseboard trim
- Missing bathroom fixtures and/or cabinets, doors
- Signs of termite damage
- Dampness or water in the basement
- Missing kitchen fixtures and/or cabinets
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10. Any Other Conditions that Risk Health & Safety
Any other conditions that are a risk to the health and safety of the occupants must be corrected.
For additional information about Minimum Property Standards (MPS) for HUD (FHA) insured financing, visit the HUD website.
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