Federal Housing Administration (FHA) loans are insured and backed by the U.S. Department of Housing and Urban Development (HUD). The insuring government entity protects the lender's interest in the event of a foreclosure, absorbing much of the loss. Because of the risk factors involved with mortgage lending, FHA loans have strict requirements when it comes to appraisals and inspections on a property. The roof of that property is no exception.
FHA regulations stipulate that any roof on a home under contract with FHA underwriting has to have at least two years worth of life left. The life span is determined by an FHA-approved and certified appraiser. If the appraiser determines the roof has less than two years of usability left, the FHA will not indemnify the loan unless the seller agrees to replace the roof.
In some instances, homeowners choose to put an extra layer of shingles on a roof instead of replacing it altogether. Adding a layer of shingles is less expensive than replacing the roof. FHA guidelines stipulate that a home can have no more than three layers of shingles to gain underwriting approval. If the roof has any more than three layers, the FHA requires the entire roof to be replaced. The appraiser hired to perform the evaluation of the home reports to the FHA underwriting regarding the condition and number of shingle layers.
FHA loans are not only used for a single-family residence purchases. They are also popular consumer loan products used when purchasing multifamily dwellings, condominiums and townhouses. If a dwelling has its own roof, it is subject to an inspection regardless of whether it has single-family or multifamily status. On the other hand, if a unit does not have its own roof -- a condo, for example -- no roofing assessment is required, as the owner of the building assumes liability for the roof, not the buyer of the individual unit.
The FHA underwrites loans for all types of roofing material except rolled roofing. In addition, the FHA requires certification that recently replaced or repaired roofing work was done by a qualified professional, especially in the instances of a torch down roof or metal roof. The FHA has a strict requirement that all roofs meet the Uniform Building Code. Whether it meets that standard is determined by the appraiser.