FHA stands for The Federal Housing Administration. FHA provides mortgage insurance on loans made by FHA-Approved lenders for FHA-Approved borrowers on FHA-Approved properties. FHA insures mortgages on:

• Single Family Homes
• Multi Family Homes
• Manufactured Homes

FHA insured loan underwriting requirements are much more stringent than conventional loan underwriting. For instance, the subject property must be the borrower's primary residence or a cost to cure any deficient items is required of the appraiser. FHA financing programs can be utilized for Multi-Family properties, but one of the units must be the primary residence of the borrower.

THe home must meet FHA Minimum Property Standards. There are too many to list here, but the exact language can be found at this link. One example of a minimum criteria is the home cannot have peeling interior or exterior paint if built prior to 1978.

FHA also allows for higher loan to value (LTV) ratiosfor mortgage financing. These ratios are determined on a case by case basis and can vary per state, county, city, etc.

FHA Appraiser Inspection

Be sure your appraiser is FHA certified if you are using FHA financing. An FHA/HUD approved Appraiser Directory can be found here:

https://entp.hud.gov/idapp/html/apprlook.cfm

[ FHA License # AZ21573 ]

An FHA appraisal is much more comprehensive than an appraisal required for a conventional loan. FHA underwriting requires that the appraiser test all major mechanical systems. It is important for home owners and real estate agents to ensure that all utilities are ON so that the appraiser can test these items

• Plumbing : Running Water? Hot Water?
• Heating : Lit and blowing furnace?
• Electrical : Working outlets/switches?

FHA also requires many more pictures documenting the condition or state of the subject property and its improvements. An FHA appraiser is specifically looking for items which affect:

• Safety : Protects the heath and safety of the occupants.
• Security : Protects the security of the property.
• Soundness : Correct physical deficiencies or conditions affecting structural integrity.

FHA Appraisers are also required to provide a cost to cure for repair items that exceed cosmetic defects, minor defects, or normal wear & tear. Examples that do not require repair:

• Cracked window pane
• Missing handrail
• Peeling paint – post 1978

FHA has special requirements for each type of real estate such as manufactured / mobile homes and condominiums.

Click Here For More FHA Requirements.

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