First-time applicants for an FHA mortgage learn soon learn about the FHA’s list of minimum property requirements, which any property bought with an FHA insured loan must live up to in order to get loan approval.
The FHA has three guiding principles that inform its list of minimum property requirements, defined by what some appraisers call “the three S’s” which include safety, soundness and security. An FHA appraiser will come to inspect the property a borrower wants to buy, looking at the home to make sure it meets the FHA standards in each of these three areas.
When it comes to safety, the FHA tells its appraisers, “Deficiencies or a lack of functioning components of plumbing, electrical or heating and cooling systems may create hazards that could be considered health and safety issues. Safety hazards can also be the result of issues having to do with the soundness of a property or simply a missing handrail or other hazards affecting the health and well-being of the occupants.”
The simple lack of a handrail or a related issue does not automatically disqualify a home from being purchased with an FHA guaranteed loan, but the FHA appraiser will note such deficiencies and require them to be corrected prior to the loan being closed upon. FHA borrowers don’t have to live in fear of the safety component of the appraisal, in many cases it’s a matter of simple corrections, improvements or additions to the property.
It’s a different matter when a property doesn’t live up to the “soundness” category. According to the FHA Appraiser Roster Newsletter, “Soundness relates to the structure and structural components of the dwelling. They include not only the foundation but also other elements such as floor, wall and roof framing systems. Decks, porches and patios may
also pose structural issues.”
Like the safety category, some structural issues may be fixed with a minimum of expense by the owner, but some problems are more serious. A roof, for example, must have at least two years of life left in it according to the FHA official site. A roof with less than two functional years may need to be repaired or completely replaced. The FHA appraiser will note any problem he or she spots and make recommendations accordingly–when it comes to problems noticed with the roof, the appraiser must recommend either repair or replacement specifically.
According to the FHA, the “secure” category is the most confusing. We’ll cover that in detail in our next blog post.