The ‘No Haunted House’ Rule: FHA’s Fun Take on Home Safety!

Have you ever wondered if that creaky old mansion with the flickering lights could pass a loan inspection? Enter the FHA’s "No Haunted House" rule! A quirky yet profound guideline that keeps homebuyers safe while adding a dash of drama to the process. Let’s unpack this fun rule, dive into what counts as a health and safety issue under FHA, highlight what appraisers check that conventional loans might skip, and note that even conventional lenders frown on these spooky surprises!

The "No Haunted House" Rule Unveiled

The Federal Housing Administration (FHA) requires homes to meet Minimum Property Standards to qualify for their loans, ensuring they’re safe, secure, and structurally sound. Think of it as a ghostbuster for your dream home with no significant hazards like crumbling staircases or exposed wiring allowed! This rule protects buyers but can turn a fixer-upper into a "pass or perish" challenge. Imagine an appraiser rejecting a house because the basement feels like a haunted lair, hilarious, but true if it’s unsafe!

What Counts as Health and Safety Under FHA?

FHA appraisers are like health inspectors with a loan clipboard, looking for red flags that could spook a buyer out of a deal. Here’s what they scrutinize:

• Structural Integrity: Cracked foundations, sagging roofs, or unstable walls.
• Electrical Hazards: Exposed wires, outdated panels, or overloaded circuits that could spark a fire.
• Plumbing Perils: Leaking pipes, no hot water, or sewage backups.
• Pest Problems: Evidence of termites, rodents, or other critters that could chew through your investment.
• Safety Risks: Broken stairs, missing handrails, or windows that won’t open or close.
• Environmental Threats: Mold, radon, or lead-based paint that could harm health.

If these issues exist, the appraiser might demand repairs before approval or adjust the loan amount, turning your haunted house hunt into a renovation project!

FHA vs. Conventional: What's Extra on the Appraisal Checklist?

FHA appraisals go beyond what conventional loans typically require, adding a layer of scrutiny that can catch you off guard:

• Detailed Walkthrough: FHA mandates a full interior and exterior inspection, while conventional appraisals might focus more on market value and skip minor interior flaws unless severe.
• Repair Mandates: FHA requires fixes for all health/safety issues (e.g., a leaky faucet or chipped paint with lead risk), whereas conventional lenders might overlook them if the home’s value holds.
• Life Expectancy: FHA checks that major systems (roof, HVAC) have at least 2-3 years of life left, a stricter standard than conventional’s more flexible approach.
• Accessibility: FHA looks for basic accessibility (e.g., no steep steps without railings), aligning with its broader buyer base, which conventional loans might not prioritize.

This extra rigor can delay a deal, but ensures the home’s livability, which is perfect for first-time buyers but a headache for flippers!

Conventional Lenders Don't Love Ghosts Either!

Don't think conventional loans let haunted houses slide! While they’re less strict on repair demands, conventional lenders still dislike health and safety issues. A home with a caving roof or electrical fire risk will tank an appraisal or scare off underwriters, as it jeopardizes the loan’s security. The difference? Conventional might approve with a lower value or require buyer repairs, while FHA forces fixes upfront. Both want a safe bet, but FHA’s ghost-hunting is more thorough!

Ready to explore FHA's safety standards for your next home? Contact our team for a smooth journey - no exorcisms required! Drop your "haunted" home tales in the comments - we'd love to hear them!

Please let me know if you have any questions or if a client needs my guidance. I’m just a call, text, or email away.

📞 Direct Line: 661-291-2222 – Text OK

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📧 Email: Mike@AugustaFinancial.com

But wait, there’s more…

Interest Rates

Interest rates are hanging in there! Not great, but not bad either! We have been floating in a range, but I feel good about popping out of this range in the coming months!

Loan Programs

• We do loans on Non-warrantable condos!
• We offer 12-day escrows for pre-approved buyers, including conventional FHA/Jumbo/Bridge loans.
• We provide loans in all 50 states, so call me with anything you need.
• Government loans (FHA/VA/USDA) are in the high 5’s and low 6’s.
• Conventional loans up to $806,500 are in the low to mid 6s.
• High-balance loans from $806,501 to $1,209,750 are also in the 6’s and 7’s.
• Jumbo loans above $1,209,750 are in the 6’s and 7’s.
• Bank statement loans are available with 10% down again, with larger down payments in the 6’s++.
• Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement!
• 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,300,000.
• Private Money lenders offer Hard Money Loans with 35% down.
• No-Ratio Loans require a 30% down payment.
• DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down.
• Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go!
• 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates!

Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits.

**Good News for Condos:**   

Canyon Village – No Longer Naughty! CV did their time, and I explained that I don’t want to see them here again! They get it, but who knows with these HOAs nowadays?

**Bad News for Condos***     

Arroyo Park – Critical repairs. We have seen others fix critical repairs in approximately 60 days, but we will see what Arroyo Park does.

Brookside Walk – They removed the 5% cap on the deductible for the Insurance, and now they are non-warrantable! Deductible is now too high!

CONDO HELP!!!

If you have a listing or a buyer interested in a specific condo, and you’re unsure whether the condo is warrantable or Non-warrantable, please call me, and we can look up Fannie’s list in real time. I have already done that on three condos today, and my list was accurate on all 3. We don’t know when something has changed, and it would be impossible to track everything day by day, but we don’t mind looking up a few each day!

The full state of California’s naughty list has been added to: MikeMeena.com! See the link below:

https://mikemeena.com/non-warrantable-condos/

Let me know if you hear anything new about condos or townhouses.

I am available every day if you need anything.

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow!