FHA Home Loan Property Standards

All FHA financed homes must meet FHA’s property standards.  These FHA property rules are better known as “Minimum Property Standards” or “MPS” for short.  3 basic elements govern FHA’s Minimum Property Standards: 

  1. Safety
  2. Soundness
  3. Security

As a result, FHA appraisers use these 3 elements to evaluate each home they inspect.  Appraisers then list out any items that violate these standards in the final FHA appraisal. 

Examples of FHA Property Violations

  • Broken Window/Glass
  • Exposed Wiring
  • Faulty Door / Window Locks
  • Defective Paint Surfaces on Homes Built Before 1978
  • Lack of a Functional Heating Unit
  • Safety Bars on Exterior Windows

Any FHA property violations noted in the appraisal must be resolved in order for FHA to insure or “back” the home loan.  Alternatively, while minor cosmetic deficiencies are not property violations, they may factor into the valuation of the home.

FHA Required Inspections 

FHA home loans do not require Termite inspections as a standard rule.  However, pest inspections and related repairs are required when FHA appraisers note pest related damage to the home in their appraisal.  

FHA also requires licensed professionals inspect the home when the FHA appraiser notes structural damage or faulty mechanical systems (including plumbing, electrical or heating) on their appraisal.

FHA Appliances Policy

In general, FHA does not require appliances such as a stove or fridge) to be present in the home.  However, there must be a space for a stove.  Generally an FHA appraiser requires the home to have a functional dishwasher if there is a space for a built in dishwasher.

FHA Loan Helpful Links

FHA Loan Overview
Escrow Holdback – FHA
FHA 203k
Mortgage Insurance – FHA
Streamline Refinance – FHA

History of FHA’s Property Policy

FHA created the “As-Is” policy for appraising on January 1, 2006.  Appraisers now evaluate homes differently due to the “As-Is” policy.  As a result, property requirements for FHA loans almost mirror Conventional loans.  Prior to the “As Is” policy FHA property requirements were more stringent.  Consequently, it was tougher for FHA buyers to get offers accepted.  Therefore, this put an FHA buyer at an unfair disadvantage.  Due to a thorough evaluation, HUD/FHA updated their requirements.  In conclusion, an FHA property must meet three general standards – Safety, Security and Soundness and it only has to meet the “As-Is” policy requirements.

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