FHA & USDA Property Requirements

When it comes to home purchases, the FHA and USDA loan programs are doing a lot of good for people who otherwise might not be able to qualify for a conventional loan. As with all things with governmental oversight, the program has some specific and not so specific guidelines that must be followed in order for not only the home buyer but for the property itself to qualify for an FHA loan.

One of the questions I often get from buyers and real estate agents alike, especially with older homes, is:

"We'd like to consider this home, do you think it will meet the FHA, or USDA Safety requirements?".


I want to first say, that as a loan officer, I'm not the judge and jury on whether a home meets the requirements. For that responsibility, the FHA relies heavily on the appraiser to raise any red flags that could potentially lead to safety concerns for the family moving into the home.

I've mentioned before that an appraiser is not the same thing as a home inspector. If you're curious about the difference, check out THIS ARTICLE. Even though an appraiser is usually only concerned with the value of a property, when it is an FHA appraisal, they are also required to make a note of any potential safety concerns.

Exactly what they're looking for can seem pretty vague, but here is a shortlist of what they are looking for and the items that come up most often.

General Health and Safety

  • Free of foundation or structural defects

  • Utilities (water, sewage, heat, and electricity) should all work

  • No chipped or peeling paint in homes built before 1978 (lead-based paint was prevalent before this time)

  • No incomplete renovations

  • Free from water damage

  • The property should accessible to vehicles, especially emergency vehicles in all seasons

  • No exposed wiring and uncovered junction boxes

  • Whether the house is too close to outside hazards, such as a leaking oil tank or a waste dump

  • Excessive noise, such as being close to an airport

  • Should be no missing handrails on any steps or stairs both interior and exterior

Every Room

  • Each room must have electricity

  • Each room must have a window or door to the exterior to be used as a fire escape

Kitchen

  • No missing or broken appliances including stove and refrigerator

  • The sink should be in working order

Bathrooms

  • Toilet, sink, or tub/shower should be in working order

  • Must have ventilation (either an exhaust fan or window)

Crawl space or basement

  • No basement moisture

  • No evidence of past or present standing water

Heating and Plumbing

  • Operable HVAC is required

  • The home must have a heating system, A/C is optional

  • Looking for any major plumbing issues and leaks


If the home you're looking at checks all of these boxes, then let's roll! Connect with me today to get pre-approved for your home purchase.

**There is one big difference between USDA and FHA when it comes to manufactured housing. If you are considering a manufactured home, call me first to dicsuss.

James Walters