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FHA Properties Do Not Have To Be In Better Condition; Misconception

We continue to hear Realtors express concern about whether or not properties are in good enough condition for FHA financing (as opposed to conventional financing). This is a misconception left over from years ago when FHA properties needed to have all Section I work cleared.

We address this often, but FHA financed properties do not need to be in better condition than properties financed conventionally. FHA does not require Section I clearances or inspection reports at all.

FHA appraisers do have a “checklist” to ensure appliances, garage doors, and plumbing are all working, but they do not have more stringent condition requirements than conventional appraisers.

Both FHA and Conventional appraisers have the same standard of care when it comes to calling out major “visible” issues that present structural or health and safety issues. Conspicuous issues might include clearly leaking roofs, significantly sloping floors, visible dry rot or mold, severely damaged floor coverings, etc.

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