FHA Repair Requirements

FHA Seller Repairs Required

December 13, 2011 By Eleanor Leave a Comment

If you are interested in purchasing a distressed home, or one that’s been foreclosed upon, it probably has some “deferred maintenance items” that need to be done. Getting the Seller to DO those items, however, is normally difficult. So the question becomes, what will FHA let you leave undone, while still giving you an FHA Loan on the home.

Here’s what we’re seeing with some “unique” foreclosed Bank Owned Properties and “handyman specials” in December of 2011.

Un-permitted Improvements:

In the last year or two, we’ve seen a couple of situations where a Seller has finished off a bonus room, upstairs, or converted a garage into a living space. If this was not properly inspected and permitted, that space will not be calculated in the value of the property. Sometimes, non-permitted additions and remodels are not completed to code. For instance, if the garage conversion doesn’t have adequate heat or insulation, the FHA appraiser / underwriter may require that these items be brought to code. [Read more...]

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FHA Repair Requirements 2011 in North Carolina

December 8, 2011 By Eleanor Leave a Comment

FHA Mortgage Underwriting Requirements for repairs are really quite different than they were several years ago, before there were so many foreclosed and distressed homes on the market in North Carolina. In 2011, FHA Home Loan Financing is one of the most popular programs available, because it is “forgiving” to folks who have had some credit challenges, it only requires a 3.5% down payment, the downpayment can be a gift, and you can purchase the property with a non-occupying co-borrower (a family member).

At the same time, Home Buyers are looking for a great deal – and this often means that they are looking for properties that are foreclosed, bank owned, short sales or… in other words have some “DIY” repair opportunites that need to be made.

The question becomes, what repairs will FHA Guidelines require be done BEFORE closing, and which items can the home buyer do once they have ownership? [Read more...]

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April 14, 2008 By Eleanor 4 Comments

FHA Repair requirements Homebuyers are looking for a deal – and sometimes you might think that purchasing a “fixer-upper” might be the best way to go!

The problem is that many sellers, including banks holding foreclosed property, might not want to accept an FHA borrower? Why? Because FHA will not take a property with a paint job like the one shown here. If you were purchasing this property, the exterior repairs would need to be done PRIOR to closing.

Most homebuyers do not want to sink money into a property they haven’t purchased yet – leaving the repairs for the seller (who often doesn’t have a ton of cash on hand, ergo this is why they are selling!).

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FHA did make some moves earlier this year that lead some to believe that it’s EASIER to get financing with FHA on an existing home… and indeed, if you are purchasing a home in fairly good shape the appraisal process is easier! Look through this list with your realtor and we believe that you will agree that a Seller of a property in reasonable repair should accept a contract with FHA financing for the borrower.

Examples of MINOR property conditions that no longer require AUTOMATIC repair for existing properties are:

Examples of Missing handrails;

Cracked or damaged exit doors;

Cracked window glass;

Minor plumbing leaks (such as leaky faucets);

Defective floor finish or covering (badly soiled carpeting);

Rotten or worn out counter tops;

Crawl Space with debris or trash;

Defective paint surfaces in homes constructed Post 1978

Examples of tests that may no longer be REQUIRED:

Wood Destroying Infestation Report-required if there is evidence of READILY OBSERVABLE ACTIVE infestation;

Well (Individual Water Test)-Required if there is knowledge that well water may be near sources of contamination;

Septic Test-required if evidence of system failure.

Don’t be confused when you hear stuff about FHA being a bad program! Get the FACTS! You MIGHT need an FHA 203K home improvement loan – ask us for details!

For more information on FHA MORTGAGES, contact Steve and Eleanor Thorne, The FHA EXPERT in NC 919-649-5058 at Connect With Us on Facebook,