House Requirements for FHA Loans
An FHA (Federal Housing Administration) loan is a mortgage you can obtain through an FHA-approved lender. This is an insurance program that makes a payment guarantee to the lender, who issues and administers the loan. FHA-insured loans offer an option to buyers who do not qualify for traditional mortgage loans, however, there are guidelines on the types of ownership and dwellings permitted.
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Units
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Housing is defined as owner-occupied properties of one to four units. There are more defined programs in certain areas that allow for other types of purchases, such as mobile homes.
Appraisals
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Appraisals are required on all FHA loans and must include a condition report. The appraisal will list known defects along with statements regarding the property safety, security and soundness; properties can be rejected if they do not meet the minimum requirements.
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Inspections
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Inspections are different from appraisals and are not required by the FHA. All homebuyers are encouraged to have an inspection for their own protection.
HOAs
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In 2006, FHA issued the "mortgagee letter" which addressed the added contingencies of homeowner associations (HOAs). These associations often had requirements that conflicted with FHA regulations, forcing buyers to use traditional loans; if the property is part of an HOA, consult its rules prior to making an offer using FHA financing.
Section 203
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For larger expenses to the buyer, such as furnaces or appliances, the FHA recommends lenders offer Section 203 type loans. These loans allow you to include these expenses in the mortgage.
Improvements
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It is permissible to purchase a fixer-upper using Section 203 funding.
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Comments
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jensearch
Nov 07, 2009
what would be recommened when a third party counter offers your offer with a conventional loan or cash offer when you are an FHA offer on a foreclosure, giving full asking price and closing cost?
