What Are the Requirements for Habitability for Housing Loans?
Most people buying their first home apply for a Federal Housing Administration, FHA, loan before seeking a private loan because FHA 203b loans are usually cheaper than private loans. Veterans usually pursue Veterans Affairs loans, or VA loans, for the same reason. Standard FHA and VA loan applicants are usually required to use the home as a primary residence. The dwelling in question must also meet basic habitability requirements before the loan can be approved.
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Electrical
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The Department of Housing and Urban Development, or HUD, stipulates that the dwelling under loan consideration have an adequate electrical supply for lighting and all equipment used in a house, and heating facilities adequate to keep a family healthy and comfortable in the surrounding climate. The house must also include adequate cooking facilities.
Plumbing
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Any house under consideration for an FHA loan must have hot and cold running water, toilets and adequate plumbing and methods of sewage disposal. If the bathrooms or basement areas have been subject to hazards, such as flooding that "impair the customary use and enjoyment by the occupants," the situation must be repaired for the loan to go forward.
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Structure
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A dwelling must be structurally sound to qualify for a FHA loan and free from dangers that might threaten the health or safety of the people living there. if the house has unsafe electrical wiring, if portions of the house are exposed to the elements, if there is substantial soil erosion near the house or if there are simply a lot of minor dangers, such as missing stair rails or a broken chimney, these issues must be repaired. If the house contains lead-based paint, the paint must also be removed for the loan to proceed.
Repairs
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If the house in question needs repairs, an FHA loan can still be approved if the house can be brought up to FHA standards with the expenditure of "not more than 5 percent of the fair market value of the property," according to HUD. The costs of removing lead-based paint, however, is excluded from these limitations. A separate FHA loan, the 203k, is available for buyers who are purchasing a distressed property specifically with the intent of fixing it up and selling it.
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References
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