Requirements for a FHA Loan?
My fiance' and myself are looking at a foreclosure home the people who were in it previously took the heat pump and hot water heater. The sheetrock is busted in the hallway where the prev. owners got mad and knocked it out. the support boards are still there. The home needs a new roof where we had some storm damage in the area earlier in the year. I have heard that you can not get a FHA loan on a home without a heatpump and that needs repairs. is this true? What kind of loan can we get to but this home? It is a good deal which is why we are looking at this home as a starter home to redo and sell for a profit.
My thing is a home is livable without a heatpump and hotwater heater. Air is not required to live neither is hot water.... That is my only issue with this
granted we will not live in the home until this get done, but I do not see how no heatpump make it not liveable. We just have somewhere else to live at the moment
- Bostonian In MOLv 79 years agoFavorite Answer
You can get an FHA 203k Rehab Loan to pub a non-conforming property into habitable condition. They will require a current appraisal by a certified FHA appraiser. That appraisal must report the current appraised value and the projected appraised value once all repairs are made. The purchase price must be equal to the appraised or less, allowing for any minimum FHA down payment requirements (typically 3%).
Once you close on the purchase, the remaining funds will be placed in escrow to pay for the repairs as they are completed. Once the repairs are completed and the permits are signed off by the town, city, or county, there will be a second closing to finalize the transaction. You will then have 30 days to move in and occupy the home as your principal residence.
Not all lenders do FHA loans and not all FHA lenders do 203k loans so you may have to shop around a bit for one that specializes in those loans.
Edit: With the exception of a few counties in Arizona, Nevada, Southern California and Florida and the State of Hawaii, a functioning heating system is a code requirement for a home to be considered fit for human habitation. A functioning hot and cold running water system for cooking, bathing, cleaning, and waste removal (toilets) is a code requirement nationwide.
Lenders typically have more stringent requirements, including that all installed systems be in good working order. That includes all of the above as well as a roof with at least one year of service life left, windows and doors that can be locked from the inside, and all walls in the living space being closed in with exceptions for minor holes, no visible water damage, etc.
No lender is going to lend money on a home at owner-occupier rates that does not meet those standards. Many might lend money at investor rates (typically 25% down minimum and add 100 to 200 basis points to the loan rate) and you can then refinance with permanent financing once the work is done and all permits signed off.
If you want an FHA loan, check into the 203k program. I've used it in the past and while it did take a couple of weeks to find an FHA lender that would take it on, it worked out very smoothly for us at the time.
- louellaLv 45 years ago
An FHA appraisal requires that there are not any wellbeing, defense, or protection disorders that might negatively influence the occupants and presents a guide that addresses these disorders. If there's a quandary with the condition of the property, then the appraisal could be finished "field to" the quandary being corrected and surely re-inspected, to ensure compliance. The market that the property is placed in will investigate the value. So far as growing the value of a residence from 80k 130k, the market could be a huge aspect in choosing that. If related houses to the dwelling are promoting at 80k, then that is what it is valued at. It could be incredibly improbable that the worth might be increased by way of 50k, irrespective of how a lot transforming you do.
- glennLv 79 years ago
They will not approve the home (in almost every part of the US) without thermostatic controlled heat and air. There are several other requirements- most are the judgment of the appraiser. FHA 's concern is if they had to take the home in foreclosure then it would hard for them to sell-so they just won't make the loan.
- Silly GooseLv 79 years ago
A home has to be 100% livable to be approved by FHA.
You would need a conventional loan. 20% down.
And even then, it may not be approved due to an appraisal being too low.