FHA Eligible Homes: What Makes a Property FHA Eligible?

Why Does the FHA Have Minimum Property Standards?

The FHA, also known as the Federal Housing Administration, has requirements for properties that they give loans on to protect both the lender and the buyer. Since the FHA takes more of a risk on a buyer than a lender who provides a traditional loan, the FHA needs to ensure that the property is sellable if it has to be reclaimed.

Additionally, having standards for a home protects the FHA buyer. Since buyers who need FHA loans usually have less money to put down on a home, making sure that the property meets certain standards also ensures that a new buyer will not be hit with home repair bills upfront.

What Are the Standards for an FHA Eligible Home?

FHA eligible homes have three types of standards: safety, security, and soundness. This means that the home must protect the safety of the people who occupy it, must be secure, and must not have anything that compromises its structural integrity.

Therefore, FHA eligible homes need to be appraised. They then review the report created by the appraiser to ensure that the property meets these standards. Things like cosmetic damage or normal wear and tear that do not affect the soundness, security, or safety of the property do not prevent a home from being FHA eligible.

Common Reasons Why a Home Isn’t FHA Eligible

There are many common problems that you might need to fix as the seller before putting your home on the market if you want it to be FHA eligible. One major reason why a home might not be FHA eligible could be due to an old or damaged roof. Additionally, things like electrical damage, a broken water heater, asbestos, foundation damage, or other hazards can cause a home to be eligible for an FHA purpose.

In order to prevent any issues with an FHA buyer, you can repair any of these problems in advance of putting your house on the market.

Conclusion

The Federal Housing Administration has certain standards that properties must meet to be considered FHA eligible properties. These standards of security, safety, and soundness are put in place to protect both the lender and the buyer. To ensure that your property is available to everyone, make sure that it meets these standards before putting it on the market.