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FHA Loans For Older Homes: A Reader Question

A reader asks, “Can a borrower use an FHA loan for homes built in 1957?”

We get many similar questions about FHA loan rules–does the FHA have any regulations that specify a home’s age as a factor in FHA loan approval? Not specifically.

Instead, the FHA has guidelines that must be followed for the condition of the property–it must meet FHA minimum property standards and be compliant with state and local building code as applicable.

There’s no single, centralized  standard that can be cited for the age of a property; the FHA requires the home be safe, habitable, and meet other general requirements.

One important factor to consider when viewing any property as a potential home is the property’s “remaining economic life”. A lender (or FHA rules) may preclude the purchase of a property with an FHA guaranteed mortgage if the property has little economic life remaining–a borrower should be able to sell the property at a reasonable rate as determined by current market conditions.

But if the home does not have much remaining economic life–and that phrase can be defined in different ways depending on the circumstances and the market–it may not be suitable for an FHA loan. These issues are circumstantial and vary from market to market.

“Old” does not automatically translate to “worthless” when it comes to property values and related factors. The home and the market play a big part in determining value. Don’t assume an older property isn’t a good investment for a home loan, but do be sure to have the property inspected before you close the deal.

Do you have questions about the FHA loan process? Ask us in the comments section.

Joe Wallace - Staff Writer

By Joe Wallace

November 28, 2012

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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