Fha Loan Home Repair Requirements

The mortgage program offered by the Federal Housing Administration (FHA) is a fantastic option for homebuyers. The 203(b) loan, which is the most popular FHA product, requires that the seller fix certain property issues prior to closing. If a seller refuses to make repairs, the FHA contract may be canceled.

Repairs That Must be Completed Prior to Closing for FHA Loans

  • Peeling paint in homes built before 1978, which might be a lead hazard
  • Unpainted downspouts and broken rain gutters
  • Rotting outbuildings in need of demolition
  • Exterior doors that don’t properly open and close
  • Exposed wiring and uncovered junction boxes
  • Major plumbing issues and leaks
  • Inoperable HVAC systems
  • Leaky or defective roofs
  • Roofs with a life expectancy of fewer than three years
  • Roof composition over shake
  • Active and pest infestations
  • Rotting window sills, eaves, or support columns on a porch
  • Missing appliances that are usually sold with a home (i.e. stove, fridge, etc)
  • Bedrooms without minimally-sized windows for egress or windows with bars that don’t release
  • Foundation or structural defects
  • Wet basements
  • Evidence of standing water in crawl space
  • Inoperable kitchen appliances
  • Empty swimming pools without working pumps, and abandoned pools with mosquito fish
  • Ripped screens
  • No pressure relief valve on water heater
  • Leaning or broken fences
  • Repairs That Are Not Necessary to Fix but should be Kept Track of

  • Peeling Paint in homes built after 1978
  • Cracked glass in windows
  • Minor plumbing defects, such as dripping faucet
  • Missing handrails
  • Damaged wall coverings in homes built after 1978
  • Worn-out carpeting or defective floor finishes
  • Beat-up or damaged exterior doors that still open and close
  • Tripping hazards, such as heaving sidewalks
  • Debris under house that requires removal
  • Poor workmanship
  • Evidence of previous or inactive pest infestation
  • Replacement of flat roofs
  • Testing of wells, unless its required by local jurisdictions or if the water is suspected of contamination
  • FHA is not concerned with cosmetic defects. If normal wear and tear doesn’t affect the home’s structural integrity, security, or safety, there shouldn’t be any problems.

    Who Needs to Make Repairs?

    Depending on the circumstance and the terms of the purchase agreement, either the buyer or the seller may perform the repairs. There will typically be an inspection clause in the contract along with a provision for the seller to make repairs, but this is not always the case.

    The FHA will only highlight those repairs that fall under the category of safety, security, and soundness rather than requiring everything to be fixed. Any seller should be aware of their responsibility to carry out any necessary repairs before agreeing to accept an FHA 203(b) loan from a buyer. Either the buyer can use the funds placed in an escrow account for repairs or the seller will make the necessary repairs themselves. If a homeowner chooses not to make the necessary repairs, the FHA cannot compel them to do so. The loan may be in jeopardy in this situation, and the buyer will have the option to terminate the agreement.

    Buyer Repairs

    If the buyer decides to proceed with the transaction, they can always agree to pay for necessary home repairs themselves or even split the cost with the seller. The FHA needs to know if the buyer has the necessary funds to pay for the repairs if they do agree to make them. They have two options: accurately estimate the cost of the repairs or include them in the sale price.

    Instead of having to deal with the hassle of making the repairs prior to closing, the seller can deposit repair money into an authorized escrow fund at closing. Only certain repairs would be covered by this option, and the FHA appraiser is likely to reject it if the house is in extremely bad shape. Then, the only remaining choice is to make use of an FHA 203(k) renovation loan.


    What would disqualify a house from an FHA loan?

    To keep its occupants safe, the building’s general construction must be in good condition. This means that the property may fail an inspection due to serious structural damage, leaks, dampness, decay, or termite damage. In this situation, repairs are necessary before the FHA loan can be approved.

    Does FHA pay for repairs?

    An FHA 203k loan allows borrowers to purchase and repair a home with just one loan, and they can even make cosmetic improvements to the house to bring it up to FHA minimum standards. With this excellent loan program, repairs are permitted to cost up to $31,000.

    What happens if seller refuses to make FHA repairs?

    The FHA contract may be terminated if a seller refuses to make repairs. Other options include the buyer assuming responsibility for repairs.

    What will flag an FHA inspection?

    Checklist of FHA appraisal requirements Must have a roof, foundation, and exterior that are all in good condition Must have safe and reasonable property access. Must not contain loose wiring and exposed electrical systems. All necessary utilities, including gas, electricity, water, and sewage, must be in good working order.