FHA Property Standards: FHA Loans Versus Conventional Loans
The Federal Housing Administration, FHA, insures residential mortgage loans to millions of residential properties and is the largest insurer of homes in the planet. The Federal Housing Administration insures over one trillion in residential mortgage loans in the United States.
FHA insured mortgage loans are not only for home buyers with bad credit. Mortgage loan borrowers with good credit and income choose the FHA insured mortgage loan route because of its many advantages such as the low 3.5% down payment requirement, its more lenient debt to income ratio requirements, and much more lenient mortgage lending guidelines. FHA insured mortgage loans also allow for gift funds to be used for down payment, non-occupied co-borrowers, open collection accounts, prior bad credit, and only 3.5% down payment for owner occupied multi unit homes where conventional loan programs require at least a 15% down payment on multi unit owner occupied homes. FHA mortgage loans have lower mortgage rates than conventional loans and they do not have risk based pricing for credit scores where it penalizes mortgage borrowers with credit scores under 720 FICO.
FHA Mortgage Lending Guidelines
Bottom line is that FHA insured mortgage loan lending guidelines are much looser with regards to income, assets, and credit than conventional mortgage loan programs but are stricter when it comes to FHA property standards. FHA property standards are reasonable but do require that the property needs to be safe, secure, habitable, and resaleable.
Exterior FHA Property Standards: FHA Guidelines
FHA property standards mandates that the subject home have access to the subject home without going through or trespassing an adjoining home. The subject home needs to be accessible from the public area giving it direct access to the subject property. This FHA property standards requirement further states that the subject home must have easy access to people and vehicles from a private or public street with a solid surface. In the event if the accessible public street is owned privately, the homeowners association needs to maintain it.
FHA Property Standards: Safe And Secure
Safety and security is one of the most important FHA property standards required for the subject property. The Federal Housing Administration mandates that the properties they insure needs to be safe from health hazards and be safe from hazards such as broken windows, faulty wiring, or structural defects. In the event if these safety and security issues does exist, it needs to be corrected prior to the mortgage lender funding the loan. FHA also requires that the subject property needs to be separate from adjoining properties via a wall that is of full height tall. FHA property standards also require that the subject property needs to be graded so water does not linger and the water will drain from the subject property’s exterior walls and does not create a water puddle.
FHA Property Standards: Foundaton And Roofs
The Federal Housing Administration’s FHA property standards also mandates that the property be on solid foundation and is free from defectiveness such as poor workmanship, mold, leaks, and other building deterioration defects. The roofs on the subject property needs to be free of any leakage and have at least a 3 year life span left.
INTERIOR FHA PROPERTY STANDARDS
FHA property standards require that the subject property have separate quarters and rooms for eating, cooking, sleeping, living, and proper sanitary for bathrooms, showers, sinks, and safe drinking water. The subject property needs to have a sanitary disposal system and working plumbing, electrical, and HVAC systems without any building violations and per code. Basements, crawl spaces, and attics needs to have ventilations in place so that moisture and/or heat will not create safety hazards or building deterioration.