May 10, 2016
Recently we received a question in the comments section about FHA requirements for homes served by wells. The reader want to know if a “shallow well” was permitted. FHA loan rules do address an aspect of this reader question, stating that for existing construction the well must deliver a specified amount of water:
“Existing wells must deliver water flow of three to five gallons per minute”. For new construction, FHA loan requirements state, “Wells must deliver water flow of five gallons per minute over at least a four-hour period”.
But one thing that is very important to keep in mind is that for well water and many other appraisal issues including electrical systems, septic, plumbing and many other features, FHA requirements are not the only ones that must be observed. State and local building code, plus any applicable federal requirements, would also have a say in what is acceptable and what is not.
FHA loan appraisal rules never take precedence over state or local code. Borrowers should know that even if a condition is acceptable in the eyes of the FHA, if it is not acceptable according to applicable building code, state or local ordinances, etc. the condition must be brought to the satisfaction of those requirements before the home may be considered eligible for purchase with an FHA loan.
An appraiser may note conditions that require correction that fall under state/local code but not FHA minimum property requirements. In such cases, if the borrower disagrees with the decision of the appraiser, he or she may have an issue with state/local ordinance rather than FHA requirements.
In cases where a borrower isn’t sure about a feature or condition of the property, it may be good to ask someone with expertise in state and local code to see whether homes with such conditions have been approved for loans in the past and if so what was required to make them acceptable according to code.
Furthermore, FHA loan rules don’t always spell out requirements for each and every potential issue that could arise with the home. FHA minimum property requirements may defer to the local standards in many cases, so the language for certain aspects of a home’s condition may be intentionally general in HUD 4000.1, allowing state/local requirements to spell out the precise details of what’s required under the law in that area. FHA loan rules don’t have specific requirements for some things, and very specific guidelines for others.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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