Navigating the FHA appraisal process can be tricky. Let’s shed some light on those pesky red flags that could hinder your homeownership dreams!

The Federal Housing Administration (FHA) loan program has been a game-changer for first-time homebuyers. But while FHA loans offer some flexibility, they also have specific property standards. Understanding these standards and potential red flags is crucial for a smooth home buying journey.

FHA Minimum Property Standards: The Basics

FHA loans require properties to be safe, sound, and secure. This means:

• Safe: No structural dangers or hazards. Think sturdy foundations, solid roofs, and safe wiring.
• Secure: Properly functioning doors, windows, locks, and lighting for a secure environment.
• Sound: Free from major defects that impact value or livability. This includes issues like water damage, faulty HVAC, plumbing, or electrical problems.

FHA Appraisal Red Flags: What to Watch Out For

An FHA red flag is anything that compromises the safety, security, or soundness of a property. It could be a cracked foundation, a leaky roof, or even hazardous materials like lead paint. These issues can delay or even derail your financing.

Here are some common red flags appraisers look for:

• Structural Issues: Cracked foundations, roof damage, water damage, missing handrails, cracked windows, termite damage.
• Health and Safety Hazards: Lead paint, asbestos, mold, exposed wiring.
• Systems and Functionality: Problems with electrical, plumbing, or HVAC systems.

Specific FHA Appraisal Considerations

• Peeling Paint: In homes built before 1978, peeling paint could indicate lead-based hazards and needs to be addressed.
• Minimum Square Footage: The property must have at least 500 square feet with at least one bedroom.
• Roof Condition: The roof must have at least two years of life left and be free of leaks.
• Crawl Space: The crawl space must be accessible, properly vented, free of debris and excess moisture.

Addressing FHA Appraisal Red Flags

If the appraiser finds any red flags, they will be noted in the appraisal report. The buyer and seller can then negotiate repairs or updates. If the seller refuses, the buyer can usually walk away from the deal.

Pro Tip: For sellers, addressing potential red flags before listing your home can make it more attractive to FHA buyers.

Need Help Navigating the FHA Appraisal Process?

I’m here to guide you every step of the way! Contact me today for expert advice and support.

Chenine Lozano, Real Estate Finance Expert W: (562) 620-7662 C: 562-762-7511 NMLS #1655101 DRE#02069548 Endeavor Mortgage NMLS#355050