In a recent blog post we discussed FHA loan requirements for properties that had non-residential zoning or other non-standard features that could make it subject to local zoning laws or other ordinances. But what about properties that may be zoned residential, have all the usual characteristics of a residential property or typical home, but are still considered non-standard?
FHA mortgage loan rules in HUD 4000.1 address such conditions. On page 498, in the section where appraisal rules are located, there is a section titled Non-Standard House Styles, which includes the following:
Non-Standard House Style refers to unique Properties in the market area, including log houses, earth sheltered housing, dome houses, houses with lower than normal ceiling heights, and other houses that in the Appraisers professional opinion, are unique.
Note that much depends on the appraiser in these circumstances, as referenced above. What does HUD 4000.1 tell the appraiser and the lender about such non-standard properties?
The Appraiser must provide a comment that the non-standard house style appears structurally sound and readily marketable and must apply appropriate techniques for analysis and evaluation. In order for such a Property to be fully marketable, the Appraiser must demonstrate that it is located in an area of other similar types of construction and blend in with the landscape.
This section of the FHA loan appraisal rules adds, The Appraiser may require additional education, experience, or assistance for these types of Properties. It is clear that FHA mortgage loans are possible for such homes, provided they meet FHA minimum standards. Whats not so clear is how state law, state/local building code, or other requirements could affect the transaction. FHA mortgage loan rules may be silent on these issues, depending on their nature, but where a state or local ordinance applies, borrowers should expect that those rules have the final say.
FHA loan rules cant and do not address all contingencies-many times HUD 4000.1 defers to local requirements or other guidance, especially where building code is concerned. Just because FHA minimum standards dont address a situation-especially one that may be encountered when a home is non-standard or unusual in some way-doesnt mean there isnt a requirement that must be met.
Speak to a loan officer to determine how FHA loans might work for non-standard properties, those with excess land, or a mixed-use multi-purpose building.