What Is a Federal Housing Administration (FHA) Loan?
A Federal Housing Administration (FHA) loan is a home mortgage that is insured by the government and issued by a bank or other lender that is approved by the agency. With an FHA loan, you may be able to make a down payment as low as 3.5%, and the credit score requirements are less restrictive than many conventional home loans. You can use FHA loans to buy a home, refinance your mortgage or renovate a home.
For an FHA mortgage loan to be approved, the home must pass an FHA inspection and appraisal. That means it must be worth the purchase price and have the basics like electricity, drinkable water, adequate heat, a stable roof, fire exits and more. Passing this inspection is a condition of final loan approval.
One of our local mortgage lenders, Lidnsey Nance with Movement Mortgage, visited our team this week and shared some of the top FHA repairs you should be aware of in the home buying and selling process. By passing the FHA lending guidelines, it opens the door to more qualified home buyers, thus improving the chance of a successful home sale. Here are her top 10:
Top 10 FHA Home Repairs
- If the home was built prior to 1978, chipping and peeling paint must be scraped and painted on the interior, and exterior of the home, garage, shed, fence, and more. You may find yourself thinking, “It’s just a cosmetic issue, why is the appraiser making a big deal out of peeling paint?” Unfortunately, for homes (including condo units) built on or before 1978, peeling paint is not just a cosmetic problem due to the use of lead paint in those construction projects before it was recognized as a safety hazard.
- Any useful components like the roof, appliances and floor covering should have 2 years of useful life remaining. A roof should have no more than 3 layers of shingles.
- Broken windows and doors should be replaced. Small cracks in windows are not an issue requiring correction for FHA, but large cracks or shards that may cause a potential for harm are definitely an issue.
- The cause of negative drainage must be fixed such as improving drainage away from the house, gutters, french drains, and more.
- Update health and safety hazards (i.e. electrical garage door opener won’t reverse with resistance; burglar bars). GFCI outlets are NOT an FHA requirement.
- Safety handrails should be installed in open stairwells of three or more stairs. If you have just a step or two without a handrail, you may not be required to add one. Three stairs or more may require a handrail, whether that’s because of state regulations or lender standards.
- Infestation of any kind should be exterminated and carry a 12 month warranty/ guarantee (i.e., insects, mice, bats, etc.)
- Damaged or inoperable plumbing, electric and heating systems should be repaired. The appraiser will check these areas.
- Structural or foundation problems must be repaired. Foundations and basements must be serviceable for the entire lifetime of the mortgage, or be repaired or modified to become so.
- If there is a crawl space or attic space, it’s the homeowner’s responsibility to make this area accessible so that it can be thoroughly inspected.
Do I qualify for a FHA Home Loan?
Thinking about utilizing an FHA loan to purchase a home? It can be a great, low down payment option! Here’s a quick, qualification cheat sheet from local lender, Lindsey Nance with Movement Mortgage!
✔️ Must have a minimum FICO score of 580
✔️ Minimum FHA loan down payment is either 3.5 percent
✔️ There is no annual income limit
✔️ Maximum loan limit of $420,680
✔️ Upfront mortgage insurance or funding fee of 1.75%
✔️ Borrowers are not eligible for an FHA-backed loan until 2 years after a foreclosure, Chapter 7 bankruptcy, or Chapter 13 bankruptcy
If you have any real estate related questions, please give us a call at (205) 579-8963! We are happy to talk and connect you with any local lenders for more personalized, home loan information.