Why Some Homes May Not Qualify for FHA?

FHA loans are commonly used in my practice for home purchases, particularly the FHA 203(b) loan, which is a good option for people with credit scores below 680. Although FHA's interest rates are favorable and require only a minimum down payment of 3.5%, a home must qualify under typical FHA 203(b) loans. A home in good repair with typical maintenance is usually no problem, but homes that have been neglected may require a Rehab loan FHA 203(k) where the cost of home repair is included in the home loan. When using an FHA loan for purchase, buyers should watch for the following issues in the home: roofs that are at or near the end of their useful life, or in tough shape; cracked or missing window panes; peeling, cracked, or checked paint; water issues; open/exposed wiring; missing electrical fixtures; missing appliances; missing or damaged carpets, drywall, or typical finishes; and add-ons that were obviously not permitted. Additionally, evidence of lots of droppings and open foundation or attic vents can be an issue. It is essential to ensure that a home is safe and healthy and does not have any health or safety issues that could compromise your ability to repay your mortgage.