When you sell your home, you will likely have many different types of potential buyers coming through it. Some of the potential buyers could be paying cash for the home, others will be securing a conventional loan through Fannie Mae or Freddie Mac and yet others might be securing an FHA loan. The FHA loans are the loans that you might need to worry about a little more, simply because there are tighter restrictions regarding the property that you are selling. Before you put your home on the market, it pays to know if you meet the minimum FHA property requirements in order to market to a greater pool of potential homebuyers.
The Exterior of your Home
The basic requirements for an FHA loan in regards to the exterior of your home are pretty straightforward.
- Entry to the home – There must be a valid, public entryway to your home, which means that the entryway should lead directly to access to your home and not require a path through any other property to gain access. In addition, all entryways need to be deemed safe and sound. If your property is located on a private street, it must be maintained by a recognized homeowner’s association in order to be approved.
- Superior Construction – The exterior of your home must be in good shape, including the roof. There cannot be any leaks, loose or missing shingles or any other type of roof damage at the time of selling your home. The remainder of the home must also be free from leaks or other structural damage that could decrease the integrity of the home.
- Good Drainage – All water drainage must be away from your property in order to prevent damage to the home’s walls or flooding on your property.
- Proper Environment – The environment surrounding your home must be free from any known dangers, including but not limited to radioactive materials and excessive pollution.
The Interior of your Home
The interior of your home must be suitable for living with ample living space and rooms that allow for sanitation, cooking, sleeping and general living. This means that the kitchen must have a working sink, stove and oven; bedrooms must have enough room for sleeping and bathrooms must have working sinks, toilets and baths/showers. Each home must have its own shutoff for the utilities, especially if it is a multi-unit property. All utilities must be in good working condition and sanitary water supply must be provided. If there are any attics or crawl spaces in your home, they need to be in good condition with proof that there is adequate ventilation to prevent dampness and mold growth which can eventually lead to structural decay.
Assessing the Potential Pool of Target Buyers
When you are marketing your home, consider who will be interested in it. If it is a home that is more suited for a second-home or those that like to have a home to vacation at, it will not be eligible for an FHA loan. If it is a home that potential buyers may purchase as an investment property to rent out to others, it will also not be eligible for an FHA loan. If your home is considered a “fixer upper” and needs a lot of TLC before someone can happily live there, it will likely not pass the FHA test. These details are important to know before you put your home on the market and spend time and money on its advertising.
FHA loans allow you to market to a broader audience when you are trying to sell your home because FHA loans offer the need for a lower down payment, they have less stringent credit requirements and their income verification is flexible. Even if your potential buyers are pre-qualified for an FHA loan, however, your property also needs to pass the test. Knowing whether or not your home is FHA approved can help you find a buyer for your home much faster than wasting time only to find out that it is not approved after securing a buyer.Click to See the Latest Mortgage Rates»