Buyers who want to finance a home purchase with a loan from the Federal Housing Administration (FHA) may be surprised to learn that they will not be allowed to buy a particular property because it does not meet the requirements for FHA loan in Texas. Why do these requirements exist, what are they and can they be corrected so that buyers can buy the homes they want? (For more information, see Understanding FHA Housing Loans.)
Why the FHA sets minimum standards of ownership
When a buyer gets a mortgage, the property serves as collateral. In other words, if the borrower stops making the mortgage payments, the lender will eventually seize the borrower and take possession of the home. The lender will then sell the house to recover as much money as possible. (To learn more about this process, see The 6 phases of a foreclosure.)
Requiring that property meets minimum standards protects the lender. This means that the property should be easier to sell and order a higher price if the lender has foreclosure. At the same time, a borrower is more likely to stay in a house that meets minimum standards because he or she will not be charged with expensive home repair bills right off the bat. In addition, borrowers will make more effort to make payments during difficult financial times if the house is a nice place to live.
Minimum Standards of Ownership – What is it?
In line with the united states department of housing and concrete improvement, the requirements for FHA loan in Texas requires houses financed with its mortgage products to satisfy the subsequent minimum standards:
- Security: The house must protect the health and safety of the occupants.
- Security: The house must protect the security of the property (as explained in the previous section).
- Solidity: The property should not have physical deficiencies or conditions affecting its structural integrity.
It then describes the conditions that the property must fulfill to meet these requirements. An appraiser will observe the condition of the property when assessing the required property and report the results on the FHA evaluation form. (Property appraisals are one of many requirements for FHA loan in Texas that buyers fill out before entering into an agreement – for more information, see Housing Deals Falling to.)
For single-family homes, the appraiser must use a form called the Uniform Residential Appraisal Report. The form asks the appraiser to describe the basic characteristics of the property, such as number of floors, year of construction, area, number of rooms and location. It also requires that the appraiser “describe the condition of the property (including necessary repairs, deterioration, renovations, remodeling, etc.)” and ask, “Are there physical deficiencies or adverse conditions that affect the quality of life, strength, or structural integrity of the property? “The condominium unit assessment form is similar but contains specific condominium issues. (See also:What you need to know about home assessments .)
The FHA does not require cosmetic or minor defects, deferred maintenance and normal wear and tear to be repaired if the FHA says that examples of such problems include, but are not limited to, the following:
- Missing handrails
- Cracked or damaged exit doors that are otherwise usable> Cracked window glass
- Defective paint surfaces in homes built after 1978
- Minor plumbing leaks (such as leaky faucets)
- Defective flooring or flooring (finished to finish, very dirty carpet)
- Evidence of previous (non-active) damage from wood-destroying insects / organisms where there is no unrepaired structural damage
- Rotten or worn counters
- Coatings, plasterboard or other damaged wall and ceiling materials in houses built after 1978
- Bad work
- Absence of entrance area for any weather
- The FHA has many problems to resolve to be fixed so that the sale ends. Here are some of the most common problems that homebuyers are likely to face. (If you buy a house, consult
Tips for Homebuyers.) Electricity and Heating
The electrical box must not contain frayed or exposed wires.
- All habitable rooms must have a functioning heat source (except in selected cities with mild winters).
- Roofs and attics
The roof must prevent moisture from entering.
- The roof must last at least two more years.
- The appraiser must inspect the attic for roof problems.
- The roof cannot have more than three layers of roof.
- If the inspection reveals the need to repair the roof and the roof already has three or more layers of roofing, the FHA needs a new roof.
- Water heater