With a significant number of bank-owned homes on the market in the Phoenix area, many of these houses are in “need of a few repairs”. If you are thinking of buying a home that is in need of a few repairs, it can be important to distinguish which repairs will be required in order to qualify for an FHA loan.
What repairs are required in order for a property to be eligible for “regular” FHA financing?
These repairs are required to be eligible for FHA financing:
- Inadequate access/egress from bedrooms to exterior of homes
- Windows and window bars must be in proper working order with proper release latches and or locks
- All smoke detectors or anything else considered a safety issue must be in place and working properly
- Leaking or worn out roofs/missing shingles or roof tiles must be replaced or repaired by a licensed contractor prior to closing and signed off on by a licensed roof inspector
- Evidence of structural problems – visible foundation or ceiling cracks, missing, cracked, bubbled out or discolored drywall, dry rot, damaged outlets, damaged or missing home exterior (siding, stucco)
- Defective interior paint surfaces in homes constructed pre-1978 – must be stripped and repainted (peeling or missing paint)
- Defective exterior paint surfaces in homes pre-1978 where the finish is otherwise unprotected – must be repainted and sealed with proper paint sealant (missing or peeling paint)
- “If the appraisal reports a potential property deficiency that may pose a threat to the safety of the occupants or the security and soundness of the property the lender will require an inspection of the condition to determine whether repairs are necessary to resolve the problem.”
There are some issues that are not required to be fixed prior to closing for FHA financing:
- Missing Handrails
- Cracked or damaged exit doors that are otherwise operable
- Cracked window glass
- Defective paint surfaces in homes constructed post 1978
- Minor plumbing leaks (such as leaky faucets)
- Defective floor finish/covering
- Evidence of previous (non-active) wood destroying insect/organism damage
- Rotten or worn-out counter-tops
- Damaged plaster, sheet-rock or other wall and ceiling materials in homes
- Poor workmanship
- Trip hazards
- Crawl space with debris
- Lack of all-weather driveway surface
These issues are considered “cosmetic” and you can still get a “regular” FHA loan with these issues noted on your appraisal according to FHA guidelines.
FHA 203k Streamline Program
For people who are interested in purchasing a home that is in need of repairs and want to finance the cost of those repairs into the loan, the FHA 203k streamline loan is a great option. The FHA 203k streamline loan will allow you to finance up to $35,000 of improvements into your new home and uses the same qualification process as a “regular” FHA loan.
Is buying a bank-owned home scary?
It is less scary if you know what will and won’t be required by the lender in order to qualify for FHA financing!
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Are termite inspection and termite repair required from FHA lender?
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