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Some borrowers get confused over the differences in what the FHA home loan program will permit versus state or local laws that have a say in similar or identical areas. It’s easy to assume that FHA loan rules would override a local ordinance, but this is definitely not true.

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FHA Standards Versus Local Laws

April 19, 2019

FHA Standards Versus Local Laws
Some borrowers get confused over the differences in what the FHA home loan program will permit versus state or local laws that have a say in similar or identical areas. It’s easy to assume that FHA loan rules would override a local ordinance, but this is definitely not true. FHA loan rules never take precedence over building code, state law, or other requirements.

FHA Home Loan Appraisal Rules Versus Local Building Codes

FHA home loan requirements for single family mortgages for a condo, suburban home, multi-unit property, or other kind of home include minimum safety standards for lead paint, the good repair and upkeep of the systems of the home such as hot water heater, plumbing, and other areas.

But state and local building code will also apply; just because the FHA home loan rule book seems to be silent on certain issues or has minimum input does not mean that the final word has been issued on the subject.

The same is true where FHA loan requirements are extensive; state and local laws will also need to be honored, too.

Local building code will apply above and beyond FHA appraisal requirements. That means that the FHA may or may not take issue with lead paint in the home-it must be properly noted, the borrower must be informed, and there are no issues with peeling paint or other violations of the FHA requirement to “pass” the appraisal”.

But even if the FHA requirements have been met in full, if a condition in the home does NOT meet state or local laws, corrections WILL be required.

FHA Home Loan Rules for Multi-Unit Properties, Mixed Use, and Zoning

FHA loan rules say very little about zoning issues, especially mixed-use multi unit properties. This should not be interpreted as being an “anything goes” situation. Instead, it should be an indication that the borrower must learn what the local rules are in these areas.

FHA loan rules do not specifically address individual laws in these cases; they defer to the local authority instead, which is why it’s important to rely on both FHA loan rulebook information and the help of your state/local authority for zoning, mixed-use property requirements, etc.

Ask A Lender or Real Estate Agent for Advice

It’s best to read up on FHA home loan rules (you will find them all in HUD 4000.1 for Single Family Mortgage loans, refinance loans, etc.) and ask the advice of those who know the ins and outs of housing purchases in your local market-your loan officer or real estate agent can give some good advice from experience in the right circumstances.

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