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FHA Safety Guidelines

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FHA loans require that certain safety hazards that could jeopardize the safety of potential buyers be documented.

Federal Housing Administration (FHA) loans are mortgage products underwritten by the Department of Housing and Urban Development (HUD). Because these are government backed and insured loans, designed to protect lenders and borrowers alike, any property being evaluated for FHA financing has to pass certain safety guidelines. Does this Spark an idea?

  1. Function

    • The function of an FHA inspection is to identify any major hazards that exist with or in a property. Items such as roofing, plumbing, electrical and structural systems are all evaluated against the FHA requirements for what is referred to as "remaining life." The remaining life of a property is the estimated amount of time that structural components and other elements in a property can be utilized without need of repair or replacement.

      For example, a roof must display at least three years of remaining life in order to pass FHA safety guidelines and inspection requirements.

    Significance

    • The FHA implements stringent safety guidelines as a precautionary measure to protect their investment should the borrower default. Should HUD have to repossess a property, the significance of resale value on a property in good repair, as opposed to a property requiring numerous upgrades and repair work, is substantial. Thus, the FHA loan program has guidelines in place to protect the investment that it is making when issuing and underwriting the loan.

    Considerations

    • Properties in need of repairs and rehabilitation can be eligible for an FHA loan under a 203K program. These loans are designed to incorporate the costs of necessary repairs and rehabilitation and add those into the loan amount. This essentially finances repairs of the defective elements of the property in order to bring them up to code, meeting FHA guidelines.

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  • Photo Credit safety image by Dubravko Grakalic from Fotolia.com

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