Musketeer Mortgage: Helping You Navigate FHA Property Requirements
FHA Appraisal Checklist: Key Requirements & Common Failures
3-1 APPRAISAL REQUIREMENTS
3-2 ANALYSIS OF SITE
1. TOPOGRAPHY
2. SUITABILITY OF SOIL
3. OFF-SITE IMPROVEMENTS
4. EASEMENTS, RESTRICTIONS OR ENCROACHMENTS
5. ENCROACHMENTS
As a general rule, an encroachment will cause a property to be ineligible for FHA mortgage insurance.
However, there are exceptions to this rule.
3-3 ANALYSIS OF PHYSICAL IMPROVEMENTS
1. GROSS LIVING AREA 2. BASEMENT BEDROOMS, BASEMENT APARTMENTS As a rule, basement space does not count as habitable space. If the bedroom does not have proper light and ventilation, the room cannot be included in the gross living area. The following requirements apply to the valuation of below-grade rooms:
- The windowsill may not be higher than 44 inches from the floor.
- The windowsill must have a net clear opening (width x height) of at least 24 inches by 36 inches.
- The window should be at ground level; however, compensating factors may allow less.
In all cases, use reasonable care and judgment. If these standards are not substantially met, the basement area cannot be counted as habitable space.
1. DESIGN
2. CONFORMITY OF PROPERTY TO NEIGHBORHOOD
3-4 REMAINING ECONOMIC LIFE OF BUILDING IMPROVEMENTS
1. ECONOMIC LIFE VS. PHYSICAL LIFE
1. ESTIMATION OF REMAINING ECONOMIC LIFE
1. END OF USEFUL LIFE OF BUILDING IMPROVEMENTS
3-5 CODE ENFORCEMENT FOR EXISTING PROPERTIES
3-6 GENERAL ACCEPTABILITY CRITERIA FOR FHA-INSURED MORTGAGES
These criteria define standards for existing properties to be eligible for FHA mortgage insurance. The appraiser is the on-site representative for the lender and provides preliminary verification that these standards have been met. The following guidelines are HUD’s General Acceptability Criteria for existing properties. They provide general guidance for determining the property’s eligibility for FHA mortgage insurance.
1. GENERAL ACCEPTABILITY CRITERIA
These minimum requirements for existing housing apply to existing buildings and to the sites on which they
are located.
1. Subject Property
2. Hazards
The property must be free of all known hazards and adverse conditions that:
- May affect the health and safety of the occupants
- May affect the structural soundness of the improvements
- May impair the customary use and enjoyment of the property These hazards include toxic chemicals, radioactive materials, other pollution, hazardous activities, potential damage from soil or other differential ground movements, ground water, inadequate surface drainage, flood, erosion, excessive noise and other hazards on or off site.
3. Soil Contamination
4. Septic and Sewage
If a septic system is part of the subject property, the appraiser must determine whether the area is free of
conditions that adversely affect the operation of the system.
1. Other Soil Contaminants
2. Underground Storage Tanks
4. Drainage
5. Water Supply And Sewage Systems
Each living unit must contain the following:
- Domestic hot water
- A continuing and sufficient supply of potable water under adequate pressure and of appropriate quality for all household uses o sanitary facilities and a safe method of sewage disposal. Connection must be made to a public water/sewer system or a community water/sewer system.
- Individual Water Supply and Sewage Disposal Systems If water and sewer systems are not connected to public systems, the water well and/or septic system must meet the requirements of the local health authority with jurisdiction. If the local authority does not have specific requirements, the maximum contaminant levels established by the Environmental Protection Agency (EPA) will apply.
- Each living unit must be provided with a sewage disposal system that is adequate to dispose of all domestic wastes and does not create a nuisance or in any way endanger the public health.
6. Wood Structural Components: Termites
FHA requires maximum assurances that a home is free of any infestation. A pest inspection is always required for:
- Any structure that is ground level
- Any structure where the wood touches ground
Structures in a geographic area with no active termite infestation may not require a pest inspection. However, the appraiser must always note: - Any infestation
- Any damage resulting from previous infestation
- Whether damage from infestation has been repaired or is in need of repair
7. Streets
8. Defective Conditions
A property with defective conditions is unacceptable until the defects or conditions have been remedied and the probability of further damage eliminated. Defective conditions include:
- Defective construction
- Poor workmanship
- Evidence of continuing settlement
- Excessive dampness
- Leakage
- Decay
- Termites
- Other readily observable conditions that impair the safety, sanitation or structural soundness of the dwelling
9. Ventilation
10. Foundations
11. Crawl Space
To ensure against conditions that could cause the property to deteriorate and seriously affect the marketability of the property, it is required that:
- There must be adequate access to the crawl space; the appraiser must be able to access the crawl space for inspection. Access is defined as ability to visually examine all areas the crawl space. Specifically, the minimum distance is 18 inches.
- The floor joists must be sufficiently above ground level to provide access for maintaining and repairing ductwork and plumbing.
- The crawl space must be clear of all debris and trash and must be properly vented.
- The crawl space must not be excessively damp and must not have any water ponding.
12. Roof
13. Mechanical Systems
These are the requirements for mechanical systems:
- Must be safe to operate
- Must be protected from destructive elements
- Must have reasonable future utility, durability and economy
- Must have adequate capacity and quality
14. Heating
Heating must be adequate for healthful and comfortable living conditions:
- Dwellings that use wood-burning stoves or solar systems as a primary heat source must have permanently installed conventional heating systems that can maintain a temperature of at least 50 degrees F. in areas containing plumbing systems.
- Properties with electric heating sources must have an acceptable electric service that meets the general requirements of the local municipal standards.
- All water heaters must have a non-adjustable temperature and pressure-relief valve. If the water heater is in the garage, it must comply with local building codes.
- All non-conventional heating systems – space heaters and others – must comply with local jurisdictional guidelines.
15. Electricity
16. Other Health And Safety Deficiencies
The appraiser must note and make a repair requirement for any health or safety deficiencies as they relate to the subject property, including:
- Broken windows, doors or steps
- Inadequate or blocked doors
- Steps without a handrail
The appraiser must operate a representative number of windows, interior doors and all exterior and garage doors, as well as verify that the electric garage door operator will reverse or stop when met with resistance during closing.
17. Lead-Based Paint & Other Hazards
If the home was built before 1978, the appraiser should note the condition and location of all defective paint in the home. Inspect all interior and exterior surfaces – wars, stairs, deck porch, railing, windows and doors – for defective paint (chipping, flaking or peeling). Exterior surfaces include those surfaces on fences, detached garages, storage sheds and other outbuildings and appurtenant structures.
OTHER CRITERIA
1. Party Or Lot Line Wall
There must be adequate space based upon market acceptability between buildings to permit maintenance of
the exterior walls for detached homes.
2. Service And Facilities Trespass.
Each living unit must have the capacity to be maintained individually without trespassing on adjoining
properties.
Utilities. Utilities must be independent for each living unit except that common services – water, sewer, gas and electricity – may be provided for living units under a single mortgage or ownership.
- Each unit must have separate utility service shutoffs.
- Each unit must have individual meters.
3. Bedroom Egress
All bedrooms must have adequate egress to the exterior of the home. If an enclosed patio (solid walls) covers the bedroom window, it is possible that the bedroom won’t qualify as a habitable bedroom. Security bars are acceptable if they comply with local fire codes. Occupants of a bedroom must be able
to get outside the home if there is a fire.
CONDITIONS NOT REQUIRING REPAIRS
Conditions that do not ordinarily require repair include any surface treatment, beautification or adornment not
required for the preservation of the property.
These are some examples:
- A wood floor’s finish that has worn off to expose the bare wood must be sanded and refinished. However, a wood floor that has darkened with age but has an acceptable finish does not need polishing or refinishing.
- Peeling interior paint and broken or seriously cracked plaster or sheetrock require repair and repainting, but paint that is adequate though not fresh does not need to be redone.
- Missing shrubbery or dead grass on an existing property does not need to be replaced.
- Cleaning or removing carpets is required only when they are so badly soiled that they affect the livability and/or marketability of the property.
- Installing paved driveways or aprons should not be required if there is an otherwise acceptable surface.
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