Questions about FHA inspections for a loan?

I have been getting so many mixed answers from realtors, mortgage companies etc.

Some have told me the inspections aren’t that strict, basically just health and safety ie. no mold, structurally sound, etc.

I have however have others told me that there must be carpet or flooring. Paint must be in good condition. Must have appliances, etc.

I am pretty handy and was planning on buying a fixer upper, nothing major but cosmetic stuff. I’m afraid I’ll wind up getting all excited, wasting money on an FHA inspection only to find out I can’t get the loan.

What exactly is a deal breaker when it comes to FHA inspections? Also, I have heard something bad on an inspection doesn’t mean you can’t get the loan, just means it has to be fixed. If the seller isn’t willing to pay or say it’s a bank propterty the buyer can get it fixed right? My question about this is why would someoen put money into fixing a house they don’t own when anything could happen such as you can’t get the mortgage but you sunk 5k into fixing this house?

What is hte 203k loan? Is it basically an assurance you will get the house providing you do the repairs with the 203k money?

4 Comments

  • First thing FHA does not do a typical inspection like a home inspection. The appraiser must inspect for safety, structure and soundness. Deal killers are, unless the seller is willing to repair items prior to closing, are bad roof, mold in the attic, peeling paint on homes prior to 1978, wood decay, broken windows, heating systems, plumbing systems, wells, septic systems and anything to do with safety. The list goes no and on. Go to the HUD website and check it out.

  • I was told that the standards have been relaxed to exclude stuff like paint and concrete.
    But I did a search and there is alot of info out there.
    I do think that termite inspections are required (if you live in an area with termites)
    Basically you just want to know that you are OK structurally and what you will be dealing with as far as furnace, water heater/plumbing, electrical systems. Inspections can give you negotiating info to bargain with if there is an issue.

  • The FHA inspections are pretty basic. They look for things like peeling paint, safety railing, loose steps/railings, mold, roof leaks, garage door openers safety features, etc.

    You are right that either the seller or buyer(with permission of the seller) may make the repairs. As a buyer, you do have the risk of doing repairs, unless you write in the agreement that the seller will be responsible for cost of repairs should deal fall through.

    The FHA 203K loan is sometimes referred to as a “rehab loan”. Up front you must get estimates from approved contractors for the required repairs. When the appraisal is done the “after rehab” value is used in the appraisal. You can use the FHA 203K loan for things other than FHA required repairs. For instance, the home has a 1950’s kitchen and you would like to rip out and replace. You would get estimates for the work and get a loan for the home + rehab.

    All FHA 203K work must be done by an approved contractor. You cannot rehab the kitchen yourself if that was on the 203K work contract.

    Good luck.

  • The basic deal breaker with FHA is the house has to be move in ready. It must not require fixing in order to live in it.

    A 203k is their version of a construction loan, very hard to obtain and only temporary, you have to refi when you are finished.

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