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FHA Home Inspections

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When you purchase a home, you want to have itinspected to ensure that it is safe and in good condition. Ifyou are securing FHA financing, you are not required tohave FHA inspectors come through your property, but theFHA does highly recommend it. Even if you do not have anactual inspector come through the property, the FHAappraiser’s job is to not only determine the appropriatevalue for the property, but also to ensure that it does nothave any severe deficiencies that are going unseen andthat HUD’s interest in the property you are purchasing isprotected. The analysis prepared by the appraiser willensure that all FHA criteria are met in order to meet theproperty requirements set forth by the FHA.

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HUD requires inspection of the property because thehome is the collateral for the funding that the FHA isguaranteeing. If you were to foreclose on the property, thebank would have possession of it to sell it to someoneelse. If they have a home that does not meet city/countyrequirements or is in poor condition, it would be muchharder to sell and would require the bank to take a seriousloss. Having FHA inspectors take a look at the home andensure its safety and stability is a way to protect both theborrower and the bank.

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The FHA looks for 3 things in a property: safety, security,and soundness. This means that the home will not pose athreat to any occupant’s health or safety and it does notcontain any physical issues that could render the houseineffective. By requiring appraisals/inspections of theproperty, you are guaranteed to be moving into a safe,stable home.

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Site InspectionsThe inspection that the FHA appraiser begins with is the siteitself. This includes an analysis of the topography, soil, off-siteimprovements, easements, and encroachments.

Topography – The site grading is an integral part of the inspection as ithelps to determine if the home will be subjected to water damage in thebasement, crawl space, or difficulty with sewage. The main priority toget approved for an FHA loan is to determine if the foundation or anyarea near the foundation is free from seepage. If it is not, it needs to bedetermined that the water is being relocated away from the home toprevent damage.Soil – The soil is a part of the site, but requires its own inspection.Proper soil draining, rock formations, and any adverse conditions thatmay affect the foundation of the home should be inspected.

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Site InspectionsOff-site Improvements – Any improvements that are near the home, butnot directly on it should be inspected. This includes curbs, driveways,and aprons – anything that would be within the boundaries of the homebut not directly attached to it. Care should be taken to determine if anyfuture plans are in the works from the governing agency regarding anyof these areas as well.Easements – The presence of any easements should be noted andinspected to ensure that they are not going to cause a problem with thehome ownership down the road.Encroachments – Typically encroachments are not allowed for FHAfinancing. The only exception to the rule is if there is a perpetualencroachment easement filed with the county and it is provided to theinspector and/or underwriter.

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Exterior Features of the HomeThe exterior of the home will have to undergo inspection in orderto determine the eligibility of the loan for FHA approval. A few ofthe things covered include:

Roofing – The roofing must be in good condition with allshingles intact. In FHA terms this means that it must have aminimum of 3 years’ worth of life left. If you reside in an areawhere there is a great deal of rain or snow, the inspector willlook for water damage and the presence of leaks. Therecannot be more than 3 layers of roofing present either.

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Exterior Features of the HomeAttic – The attic must be easily accessed and ventilated.There should not be any holes or damage to the supportstructures and there should not be any water damage.Foundation – There cannot be any cracks or leaks in thefoundation.Location – If the property is located near landfills, areas withhazardous items, or is surrounded by pools of harmfulchemicals or even standing water, it will not be eligible forFHA financing.

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Interior Features of the HomeThe interior of the home will undergo an extensive inspection inorder to determine if the home is worthy of FHA financing. Theareas inspected include:

Framing – All framing must be in good condition without any majorcracks. There should also be no visible holes, damaged walls, or anytype of water damage.Basement – The basement must have easy access that is not blocked.There should not be the presence of any water damage, nor shouldthere be any major cracks that compromise the integrity of thestructure.

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Interior Features of the HomeCrawl Space – The crawl space should be easily accessed and amplespace to perform any necessary maintenance. The support beamsshould be intact and there should not be any signs of dampness or waterdamage.Heating – The furnace should be in good, working condition without anyloud noises, odd smells, or any deterioration. There should be a mainbreaker that can shut off the electrical to the house. All rooms should beable to be easily heated.Electrical System – All electrical systems should be in good, workingorder. All outlets should be functional, electrical switches should work,and all wiring should be in good condition. There should not be anyexposed wires or any sparks/issues with any outlets.

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Interior Features of the HomePlumbing – The water pressure should be adequate; hotwater should be working; toilets should be in good conditionand working; and there should not be any leaks in any of theplumbing including showers and tubs.Paint – All paint should be in good condition. If the home wasbuilt before 1978, any chipped pain inside or outside isunacceptable. If the home was built after 1978, chipped paintoutside is unacceptable.Water Heater – The water heater must meet with theparticular city or county codes for the area the home resides.

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The FHA does not care about cosmetic issues; their mainconcern is the health and safety of the occupants in the home.Following are some concerns they would have with a home ifthese issues were present:

Issues with stairs such as missing handrails or damagedstepsDoors that do not workWindows that are cracked or brokenAny type of leaksCarpeting that is excessively soiledPresence of termites and termite damageAny type of trip hazard

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In addition, the FHA will look for any type of nuisance issues. These things include:

• Located close to hazardous waste• Excessive traffic• Excessive noise (airport, train, etc.)• Located near power lines• Located near radio or television towers

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In general FHA inspections help to prevent thesale of homes with any of these issues. If youhappen to fall in love with a home that getsdeclined for FHA financing, there are options.Sometimes the seller is willing to fix theproblems, which is the easiest solution. If not, itis sometimes possible to increase the sellingprice so that the issues get fixed and theappraisal is passed and the seller still gets hismoney back from the repairs.

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INFORMATION PROVIDED BY:

Justin McHood

Mortgage Commentator

Information Originally Published: 10/16/15

Justin McHood is Americas Mortgage Commentator and hasbeen providing Mortgage commentary for over 10 years.

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