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FHA Loan Appraisal Requirements: A Reader Question

August 20, 2014

052A reader asks, “We are looking at purchasing a home that was built in 1871 almost everything has been replaced but the owner can not find the well. They have an idea of where it is but not sure.”

“They just put in a UV Water system and replaced the septic tank, but I am concerned that we will not get approval with an FHA loan. Any advice or suggestions would be greatly appreciated. I have already contacted our county property surveyor and health inspector and there is no information with the county on the property because in NY only new properties get surveyed.”

Questions like this are very difficult to answer for one simple reason–FHA minimum property standards aren’t the only rules at work when it comes to appraisals. State and local building code also applies and FHA home loan would be conditional on any repairs or corrections recommended by the FHA appraiser based on state/local code requirements.

It is true that FHA appraisal rules have some specific information regarding certain conditions in and around the home, but the state and local code compliance issues are just as important.

Do the upgrades and improvements mentioned in the reader question meet state or local building code? Does the existence of a well–even one not in use–require additional consideration, corrections, or other action in order to be compliant?

These are important questions that can only be answered by the local or state building code authority. Borrowers in this situation should discuss their situation with the local authority for further information. You may be able to get some general answers by asking a real estate agent experienced in these issues, but checking state/local laws is definitely a good idea.

Potential borrowers may also be able to get some answers from a professional building inspector who knows the laws in that area for compliance.

Do you have questions about FHA home loans? Ask us in the comments section.

Joe Wallace - Staff Writer

By Joe Wallace

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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