FHA loan rules specify that a home must meet minimum standards in order to be approved for an FHA mortgage. These standards, set by the FHA, do not include state or local building code (which must also be satisfied) and FHA loan rules cannot override the law.

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General Property Requirements for FHA Mortgage Loans

General Property Requirements for FHA Mortgage Loans
November 15, 2017 - But the FHA minimums must be observed; what are the FHA standards?

General FHA Loan Appraisal Requirements

FHA loan rules require the property to be safe, habitable, and must have a remaining economic life that lasts at least as long as the loan itself. However, not all homes are in the same condition when they are sold as brand new houses. And then there are the homes purchased under the FHA 203(k) or FHA 203(h) rehab loan programs. A fixer-upper home would obviously be unable to meet minimum standards at loan closing time. What does the FHA loan rulebook have to say about these issues?

All properties to be purchased with an FHA mortgage are required to meet the minimum standards as a condition of loan approval-but the timing of that depends on the type of loan or refinance loan you seek.

If you want to buy using a typical FHA “forward mortgage” loan, also known as an FHA 203(b) mortgage, any appraiser-required corrections or repairs must usually occur before the loan closes and a compliance inspection may be required to insure the work has been done to FHA specifications.

You may be able, depending on circumstances, to negotiate a different completion date with the lender. This may not apply to all mortgages and you will need to discuss your situation with a loan officer to see what’s possible.

FHA Minimum Property Requirements: Foundation Issues, Accessibility, and More

When you buy a home with an FHA mortgage, the home must have a suitable foundation which meets federal/state/local code requirements where applicable. Properties must be “accessible” by paved roads. The FHA loan rulebook describes this required specifically-the home must be situated at or nearby "an all-weather road surface over which emergency and typical passenger vehicles can pass at all times."

There are other standards. The home and land must feature adequate drainage, there should be no sinkholes, hazards, or nuisances such as noxious fumes or high noise levels. There should be no “excessive moisture” leaks, or seepage. HUD 4000.1 requires homes to be purchased or refinanced with an FHA loan to be connected to local utilities or approved substitutes such as health authority-approved wells/septic systems. FHA loan rules generally defer to the local authority in areas of health standards.

Ask your lender or real estate agent about specific features of a property you aren't sure about in terms of qualifying for FHA minimum standards. You may learn of certain exceptions, “grandfather clauses” or other circumstances that permit the purchase of a home depending on local conditions and regulations.