Cathy Lomasney's Blog
If you are in the market for an FHA loan, you are probably happy to get many benefits from the loan like a good interest rate along with the need for a low downpayment. While these loans can be very helpful on the path to homeownership, they can be complex. It’s a good idea to hire a realtor who is well-versed in the ins and outs of FHA loans and standards. A real estate agent can help you to find the right property to suit your needs and meet the standards the FHA loan will require.
Do you know what you’re getting into when it comes to shopping for a home? The FHA sets the rules for how homes get approved for an FHA loan and under what standards. These rules exist because the FHA is insuring the loan, but the organization is not directly funding the loan itself. This insurance protects the lender if the loan is defaulted on. An inspection appraisal report must be completed on each property. The appraiser is required to be an FHA approved appraiser to complete the job.
There are limits on how much of a loan you can get when it is FHA-backed. This is because the FHA will only insure a loan amount up to this limit. This means that you won’t be looking at high-end homes because the limits are usually quite restrictive as to the type of property you can get. This holds true unless you can afford a larger downpayment than the standard 3.5% required by the FHA.
Condition Of The Home
FHA-backed home loans can be rejected due to the poor condition of the home. If an appraiser says that the home is unsafe or hazardous to occupants, the loan will be denied. The assessment of the home’s condition is very important to the lender’s decision to grant the loan. The lender may even require that certain improvements be made before the loan can be approved. These improvements can include pest treatments, fixing leaks, or other damages that are deemed hazardous.
The Property Itself
The FHA also sets guidelines for the type of property that you can get. A condo must be in a HUD approved complex, for example. If you want to research FHA-approved condo complexes, you can search right on the HUD website. Each complex meets the Department of Housing And Urban Development’s standards for financial stability, hazard, and liability insurance. If you’re looking at manufactured homes, these are also held to certain standards. The manufactured home must be permanently attached to the foundation, have the ability to be taxed as a real estate property asset, and have been constructed before June 15, 1976.