Everything You Need to Know About Buying an FHA-Approved Home

When shopping for a home to purchase with an FHA loan, it’s crucial to understand the concept of FHA approval for properties The FHA has strict guidelines that homes must meet in order to be eligible for financing with one of their low down payment government-backed mortgages. As you search for your dream home, make sure you know the ins and outs of finding and buying an FHA-approved house

What Does FHA-Approved Mean?

When a home is deemed FHA-approved, it means that property meets the standards set by the Federal Housing Administration (FHA) to be purchased using an FHA loan. Some key things to know:

• An FHA-approved home has passed inspection showing it is safe, secure and structurally sound.

• The home meets HUD’s minimum property requirements and habitability standards.

• The property is eligible for financing with an FHA loan featuring 3.5% down and flexible credit.

• FHA approval indicates the home is a smart long-term investment that meets livability benchmarks,

Getting a house FHA-approved opens up affordable low down payment financing options to buyers. It signals the home is a quality place to live in and resell later on.

Why FHA Approval Matters

As a buyer, you can only use FHA financing on properties specifically approved for the program. So checking a home’s FHA status is an essential step when house hunting with an FHA loan.

Key reasons FHA approval matters:

• Mandatory for FHA Loans – Cannot obtain FHA financing if the property is not approved.

• Higher Standards – FHA appraisals are more rigorous than conventional ones. Ensures home is high-quality.

• Added Protections – Approval means the home meets safety and soundness benchmarks set by the government.

• Inspection Required – Home must pass an additional FHA appraisal before closing if not already approved.

Taking the time to verify FHA approval can prevent headaches and delays during the buying process.

How To Check FHA Approval Status

When viewing listings online or touring homes, you’ll want to confirm their FHA status right away. Here’s how to check:

• Ask Listing Agent – They should know the FHA approval status and be able to verify.

• Look for Listing Details – Some sites like Zillow note “FHA approved” on the listing if confirmed.

• Review FHA Appraisal – Ask to see a copy of the FHA appraisal certifying the home.

• Call FHA – You can contact HUD’s FHA Resource Center to check.

• Apply for Loan – When you apply for an FHA loan, the lender will verify the property’s eligibility.

Getting FHA approval confirmation in writing provides peace of mind when purchasing a home.

Why Homes Fail FHA Approval

Not all properties meet the FHA’s stringent approval criteria. Some common reasons homes fail to get FHA approval include:

• Major defects found during the FHA appraisal like cracks in foundation or water leaks.

• Outdated, faulty or dangerous systems like electrical, heating, or plumbing.

• Structural issues such as sagging roofs, floors, or ceilings.

• Proximity to undesirable environmental factors like busy roads or power lines.

• Unpermitted add-ons like room additions or accessory dwellings.

• Lack of kitchen or bathroom facilities meeting minimum livability requirements.

• Infestations or damage from termites, mold or other pests.

• Excessive repairs needed to make the dwelling meet safety standards.

Issues like these get flagged during the stringent FHA appraisal inspection and prevent the home from being eligible.

How To Make a Home FHA-Approved

If you find a home you love that isn’t currently FHA-approved, it is sometimes possible to make it compliant. Here are steps the seller can take:

• Request an FHA appraisal to identify needed repairs.

• Make all required updates and fixes to satisfy FHA guidelines.

• Provide receipts and documentation on completed work.

• Request a re-inspection once repairs are made.

• Have the appraiser certify the home as FHA-approved once all standards are met.

• Some updates like installing handrails, grading land or replacing old fixtures may be DIY. Others like foundation work require pros.

With the right repairs and improvements, many homes can meet the bar for FHA financing eligibility.

Finding FHA-Approved Listings

As an FHA loan buyer, focusing your home search on already-approved listings saves time and hassle. Here are some tips:

• Check the FHA approval box when filtering online real estate sites like Zillow.

• Work with a buyer’s agent experienced with FHA transactions who can help identify compliant properties.

• Search the MLS for the FHA case number or approval certificate to verify status.

• Look for listings advertised as “FHA approved” or “FHA eligible.”

• Widen your search parameters to increase options.

• Consider FHA-approved fixer-uppers if you don’t mind renovating.

Casting a wide net in your search makes finding an already FHA-cleared property much more likely.

Financing FHA Home Repairs

If you purchase an FHA home needing repairs, you have options to finance these into your loan. Pre-approval letters commonly account for a few thousand in planned repairs. Or, you can get an FHA 203(k) Rehab Mortgage which rolls the upgrade costs into the loan.

Just make sure major issues identified on the FHA appraisal are fixed before closing to guarantee your loan sails through. An FHA-approved inspector must then sign off on completed repairs.

Shop with Confidence for FHA Homes

In today’s competitive market, buyers using FHA financing face the added obstacle of finding not just the perfect home, but one that meets FHA’s stringent approval standards. While it involves some extra legwork, going above and beyond to identify and verify a property’s FHA status gives you confidence as you make an offer and move forward in the buying process. Partner with experienced agents and lenders well-versed in FHA guidelines to make your purchase of an FHA-approved home smooth sailing.