Published on 09/15/2009

In this new economy where FHA Mortgages account for almost 75% of the new mortgages in our valley, many people do not realize that the FHA requires certain items in a home to be in working condition (or at least in the home) before they will fund the loan. This is very important for buyers using FHA mortgages to purchase bank owned homes that are many times in less than move-in condition. The following is a list of items REQUIRED by the FHA, and items that are not required. Thanks to Aerick at Security Mortgage for providing the details below.

These items are required by FHA to be addressed or inspected are as follows:

Missing built in kitchen appliances including built in dishwashers, vent hoods and or microwave ovens that were originally a built in item above the stove. It should be noted that it is the lenders underwriter’s discretion to require a stove in the property. Most transactions will require a stove be in the property.
Defective mechanical systems (electrical, plumbing and heating).
Leaking or worn out roofs. If appraiser notes missing shingles or roof is in need of repair, then roof inspection/roof repairs are required.
If the appraiser notates evidence of termites a termite inspection will be required. Conditions conducive to termite infestation: Earth to wood contact, soil slopes toward foundation, and wood debris close to the home – termite inspection should be required.
Evidence of structural problems – such as foundation damage caused by excessive settlement (significantly large and/or several cracks in floors and walls or bulging foundation walls).
Defective interior paint surfaces in homes constructed in or prior to 1978.
Defective exterior paint surfaces in any home where there is exposed wood or any other otherwise unprotected surface.
Standing water against the foundation (generally due to faulty grade).
Inadequate access/egress from bedrooms to exterior of home. Security bars must have quick release latches.
Hazardous materials on the site or inside the home.
Empty swimming pools/green or cloudy water. Pools have to be filled; water has to be clear and pump has to be tested. Pools need to be in working order.

These items NOT required for FHA loans as follows:

Cracked window glass
Missing handrails
Rotten or worn out counter tops
Minor plumbing leaks
Defective interior paint surfaces in homes built after 1978.
Cracked or damaged exit doors that are otherwise operable.
Trip hazards (cracked or partially heaving sidewalks or poorly installed carpet).
Evidence of prior (now non-active) termite infestation where there isn’t any evidence of un repaired structural damage.
Defective floor finish or covering (worn thru finish or badly soiled carpet).
Cosmetic defects, poor workmanship, conditions resulting from poor housekeeping.