There was a time not long ago that a property had to be nearly perfect upon purchase in order to pass the strict inspection involved in an FHA
First, let me explain: the inspection during the appraisal process should not be confused with a home inspection. The FHA simply has its appraisers make certain a property meets certain minimum criteria before it will agree to back the loan.
Like most things in today’s real estate market, the FHA has had to change with the times. According to Vikki Boedekker at Burnet Home Loans, “FHA appraisal guidelines have relaxed while conventional guidelines have tightened up so the net result is that there are few differences on a practical level.” The key issues are: safety, habitability, structural integrity and marketability. The definitions of those things, she adds, “have gotten broader or more open to ‘common sense’ interpretation.”
While the FHA standards are extensive, five common maintenance items to be on the lookout for are:
The good news is FHA lender-mandated repairs totaling less than $5000 are no longer required to be completed prior to closing. And, of course, it’s virtually impossible to paint the exterior of any duplex in a Minnesota winter.
Of course, these relaxed standards are especially beneficial with the plentiful supply of foreclosed properties on the market. Many would actually sail through FHA appraisals. For a complete list of the FHA’s valuation conditions, click here.