House Requirements for FHA Loans

The U.S. Department of Housing and Urban Development has minimum requirements for most FHA loans. These Minimum Property Standards, or MPS, are in addition to local code requirements for occupancy. Most of them have to do with the durability and longevity of the property.

MPS and Building Codes

HUD's requirements for most FHA mortgages begin with compliance with a recognized building code -- either a state or local code or a nationally recognized building code, such as the International Building Code. Increasingly, local building department codes, such as the Los Angeles Building Code and the California Building Code, essentially are the IBC code with a few modifications or additions.

Where the residence is in an unincorporated area that does not have a building code, the local HUD specifies an appropriate code and the building is evaluated on the basis of that code, even though it may have been constructed without reference to it.

MPS Requirements That Exceed Building Codes

In certain areas, HUD's requirements exceed building code requirements. In general, these requirements are specified in HUD's "Minimum Property Standards for Housing, 1994 Edition," a collection of 20 subordinate documents, each of them separately downloadable from HUD.gov. Most of these requirements also are spelled out in the 2014 FHA Single Family Housing Policy Handbook.

In general, the HUD requirements for FHA mortgages that exceed IBC and similar building codes have to do with component durability, particularly of doors, windows, gutters, downspouts, painting and wall coverings, kitchen cabinets and carpeting. The MPS covers each of these separately. The FHA Single Family Housing Policy Handbook also lists certain requirements for noise and traffic that may exceed local ordinance requirements. A residence near an airport, for example, may comply with local building codes, but not comply with FHA sound level requirements.

FHA Repair Requirements

The HUD specifies that the following deficiencies must be remedied prior to approval of an FHA loan:

  • Inadequate access/egress from bedrooms to exterior of home
  • Leaking or worn out roofs
  • Evidence of structural problems
  • Defective paint surfaces in homes constructed before 1978
  • Defective unprotected exterior paint surfaces in homes constructed "post-1978"

An Exception

HUD has a 203(k) loan program specifically for houses in need of repair. There are two different loan types, a regular 203(k) mortgage and a streamlined (or "modified") 203(k). Regular 203(k) loans are for properties requiring structural repairs. Streamlined 203(k)s are for properties that require only non-structural repair. Both loans require the applicant to be the owner-occupant.

In addition to the usual loan requirements, such as proof of income and qualifying credit record, the applicant must also include a detailed proposal showing the scope of work to be done, including a detailed cost estimate.

You can find a lender in your area that makes 203(k) loans using the search tool in HUD's Lender List.