Home, Land, Property Buying and Selling - FHA Home Inspections.

My wife and I have been pre-approved for an FHA loan. My problem here is that we don't want to spend more than seventy thousand dollars and what I'm coming up with are alot of older homes. Don't get me wrong, I'm fine with an older home but it seems alot of Realtors are thinking FHA won't approve anything other than a home in almost perfect condition. My lender has told me that, that was the case up to a couple of years ago and its much easier to get a home passed by an FHA inspector now. In fact he said. The guy who sits two desks from him just closed a FHA home that needed to be almost completely remodeled. He also said he hasn't had an FHA rejection in about a year and a half and he does about three FHA loans a month. Has anyone closed a not so perfect home recently that was through FHA and how did it go? I know the basic requirements with heat and all that. I just don't need them nit-picking a home I'm interested in buying. I can easily fix the dumb crap. Anyone have any comments? :confused:

FHA loans certainly are harder to get with issues on home appraisals. Be weary of any lender that says no problem we can make it work as thats what gets people in trouble. IF you can go through the house and there are problems that you see, then chances are it wont pass FHA. Some lenders will squeak it by but if FHA audits the file they could get in trouble for letting it pass when it should not have. However, i doubt this will affect you

Congratulations on FHA loan approval! That's the first step. The second step is to find a home within your price range that can pass a home inspection as required by FHA.

http://www.pueblo.gsa.gov/cic_text/housing/inspection/home.htm

http://www.fhaday.com/

http://homebuying.about.com/od/financingadvice/qt/FHALoansAreBack.htm

You can do additional Google research to find out more info re: FHA financing and home inspections.

" I just don't need them nit-picking a home I'm interested in buying. I can easily fix the dumb crap." That's not how the inspector will see it. He will report the results of his visual inspection.

Average home price is currently down due to current real estate market and mortgage situation. Average home price nationally is $195,900. Finding a house for less than $70K and having enough $$ for improvements looks like that will put you between a rock and a hard spot. And, factoring in the stringent FHA inspection, that muddies the waters further.

Thus, the market for prefab homes and double wides attract many folks. Problem is owning a piece of land to park the new home and costs of installing water and sewer and foundation.

Sounds like you are eager for home ownership. But, it also sounds like you need to do much more ground work.

You do not supply info re: employment for yourself or your spouse. Union companies are shutting down and moving overseas. Our employment base continues to disappear. Major question: Job security and ability to meet mortgage payments, utilities, taxes, and upkeep. Do you have money in reserve to replace a roof, water heater, address basement moisture issues, etc.

Most of us live from paycheck to paycheck. Unless you are prepared to take the big gulp and indebt yourself and have backup cash to meet the demand, I'd say back off.


Oh, we have our dreams. Our reality is another story.

Any cosmetic repairs DO NOT have to be fixed and/or repaired.
Here's some good info:

http://www.hud.gov/offices/hsg/sfh/ref/sfhp1-01.cfm

"...the appraisal provides an examination of the property for any visible, obvious and/or apparent deficiencies that may affect the livability of that property in terms of basic needs, health and safety of the property's occupants. HUD/FHA MAKES NO WARRANTIES AS TO THE VALUE AND/OR CONDITION OF ANY FHA-APPRAISED PROPERTY, therefore buyers/borrowers must determine for themselves that the price of the property is "reasonable" and that it's condition is "acceptable""

It IS wise and encouraged to get a home inspection, however, it is not "required".

FHA or the lender wont look at the inspection, only appraisal. the inspection is for you, the buyer.

The appraiser will notate any deferred maintenance and things that may seem cosmetic will still cause hang ups. I.E., pieces of siding missing, window broken out, sub floors exposed, cabinets missing, etc..... these are all items that can cause problems.

Although "pre-approved" you must be very careful as this really holds no more contractual weight than the piece of paper its is written on. As long as your credit profile and income stated fits into the guidelines, a pre-approval can be written. Only when all of the info is gathered and reviewed by the underwriter (including the appraisal) and accepted, do you know the loan will go through. Unfortunately this happens much later in the process after everyone has invested lots of time and money.

This is why you want to do as much research as possible and closely inspect homes yourself. If in doubt, take a pic of an area of a home that is in question and email it to HUD. They will be able to tell you if its a potential problem.

"The guy who sits two desks from him just closed a FHA home that needed to be almost completely remodeled. He also said he hasn't had an FHA rejection in about a year and a half and he does about three FHA loans a month"

This is somewhat alarming as this tells me their underwriters may not be properly doing their job and its a matter of time before they get caught. Same type of mortgage trouble you hear about in the news, but just in a different area.

However, FHA does do 203K loans which is basically a remodel loan or rehab when purchasing. they are a pain in the butt but this might be the thing to look at. It is different than the 203b which is much more common and what we are all talking about. do some research on this loan and ask some lenders if they write these as this might be your ticket

FHA has thier own inspectors/appraisers . They will come and inspect/appraise the house. They arent going to give an FHA backed loan on a house that is falling apart. You will still need to get your own inspection as they are not quite as thorough as a home inspector and they are not liable if the roof falls in a week after you move in.
As long as the house you want just basically needs updating and minor stuff done you are fine. Mine was FHA 8 months ago needs updating.