FAQ's HUD/FHA Requirements

Electrical outlets will be evaluated to ensure that they are safe and installed correctly. Futhermore, certain receptacles, such as those within six feet of a sink or shower/tub are required to be GFCI-protected. This is typically baths, kitchen and laundry rooms with utility sinks. When these receptacles are not GFCI-protected, a deficiency or fail condition will be recorded.

As part of its ongoing commitment to provide decent, safe, and sanitary housing, HUD has announced that all federally assisted units must be equipped with carbon monoxide detection systems. Therefore, if the local ordinance requires a CO detector then HUD/FHA will require them. The state of Illinois requires a CO detector be installed within 15 feet of all sleeping areas including basement bedrooms. Make sure your home meets this requirement or a fail or deficiency will be recorded. This is an easily avoided health and safety issue that is frequently ignored. Be sure your home is protected with proper CO detectors.

Per HUD/FHA requirements appraisers will examine the electrical box to ensure there are no broken or frayed wires. Major selling guides (Fannie Mae, Freddie Mac & FHA) are ok with knob and tube wiring. Per HUD/FHA guidelines as long as it functions, is safe, in good condition, and is a minimum of 60 amp service. Due to potentially old and worn wire insulation that becomes brittle, it can easily fall or break off and leave bare wires exposed and become a fire hazard. Therefore, knob & tube wiring will typically require an electrical inspection by a professional. This is to verify the condition of the wiring, connections, receptacles, switches, and fuses or circuits to insure safety.

The requirement of two means of egress from any building to the public way is mandatory. All multi story homes require interior access to the floors above. However, there is one clarification that any fire escape or emergency exit must function and operate as designed for 2-4 unit multi family properties. The Appraiser must not identify a room as a bedroom that cannot accommodate ingress or egress in the event of an emergency. This requirement is regardless of location above or below grade.

Working smoke detectors are required. HUD/FHA does not specify which kind is acceptable, only that a smoke detector “acceptable to the local building and fire codes” be used. Futhermore, every single-family residence shall have at least one approved smoke detector installed on every story of the dwelling unit, including basements. Smoke detectors are not required in unoccupied attics. In 2017, Public Act 200 was passed to update the Illinois Smoke Detector Act to reflect advances in technology.

The roof should have a remaining physical life of at least two years. If the roof has less than two years remaining life, then the appraiser must call for re-roofing or repair. The appraiser must clearly state whether the subject is to be repaired or re-roofed. In addition to potential leaks or remaining physical life there should be no more than 3 layers of shingles on any roof. FHA will accept a maximum of 3 layers of existing roofing. However, If more than 2 layers exist and repair is necessary, then all old roofing must be removed as part of the re-roofing.

At a minimum there must be at least one window or door per room that provides easy access to the exterior. If the only opening to the outside has non-opening security bars this would NOT be acceptable. The bars would have to either be removed or be made to easily open with safety releases to meet FHA guidelines. Broken windows or rotted frames must be repaired or replaced.  Windows must be operable and be freely opened or closed. If not these windows must be repaired or replaced. 

Requirements on hot water heaters are typically the repair of leaky valves. Any dripping valve must be repaired or replaced.   Additionally, All traditional hot water heaters must have a 3/4-inch non-adjustable temperature and pressure relief valve on the hot water heater that diverts safely to the ground or pan. Licensed contractors know this is code and always include the diverting pipe on all intallations. When homeowners complete the installation this is when the diverting pipe is usually not installed. This is one of the most frequent HUD/FHA repair items. Check your hot water heater and if there is no divering pipe you should get one.  These are commonly sold and your local home improvement stores.

Electrical Systems

The Appraiser must examine the electrical system to ensure that there is no visible frayed wiring or exposed wires. This includes the garage and basement areas. The appraiser must report if the amperage and panel size appears inadequate for the property. The Appraiser must operate a sample of switches, lighting fixtures, and receptacles inside the house and garage. The appraiser willl also inspect the exterior wall recepticles and report any deficiencies.

There must be positive airflow through the crawlspace so that there is no dead air space. This helps reduce the potential for moisture problems. Also, the crawl space must not have ponding water and should be free of debris. It is ok to have a few items in the crawl space. However, if it’s so full that viewing the crawl space is not possible then it would need to be cleaned out. The minimum crawl space height is approximately 16 inches.

The Appraiser will be checking for readily observable evidence of grading and drainage problems. Accordingly, proper drainage control measures must include gutters and downspouts. The appraisers must check for appropriate grading or landscaping drainage  diverts the flow of water away from the foundation. If you have missing or broken gutters or downspouts they must be replaced or repaired. Water is the biggest enemy of home foundations and basements. You must be sure your home has proper drainage or it is an automatic fail.   

Heating  Systems

The Appraiser must examine the heating system to determine if adequate for healthful and comfortable living conditions. This is regardless of design, fuel or heat source. The Appraiser must notify the lender of any deficiency if the permanently installed heating system fails the following items:

Heating requirements

All heating systems must automatically heat the living areas of the house to a minimum of 50 degrees Fahrenheit in all GLAs. This is also required for any non-GLAs containing building or mechanical system components. Appraisers will report if  subject to failure or damage due to freezing. Heating systems must provide healthful and comfortable heat and be safe to operate.  The heating must rely upon a fuel source that is readily obtainable within the subject’s geographic area.  Heating must have market acceptance within the local marketplace. Futhermore, the heat must operate without human intervention for extended periods of time.

All homes must have all required utilities, including electricity, gas if a primary heating fuel source, water and sewage functioning properly. This includes well and septic system requirements.  Access to homes must be passable, safe and reasonable for emergency services.  Overgrown or neglected private road access to homes need to be cleared and reasonable to drive.  

FHA Distance Requirements Existing Homes

• Property line – 10 feet

• Septic tank – 50 feet

• Drain field – 100 feet

Although, there are some variations in certain cases. If allowed by the local authority, the septic tank drain field may be reduced to 75 feet. Also, if the property line is next to residential property, use the local authority well distance requirements. But, if the property is next to non-residential property or roadway, there must be at least a 10 foot distance from the property line.

Local Authoity

In cases where the local authority allows for further distances, it will prevail over the above requirements. So, proof of this should be added to the loan file. When buying a home with a well or septic tank, it is highly recommended to request a well water test and septic tank inspection. In some cases, it may be required.

If your appraiser determines that FHA repairs are required, then it will have to be completed before the loan is closed per FHA guidelines. This can cause delays in the loan closing and can cost the borrower additional money for a final inspection fee. Therefore, it is always beneficial to address the repairs prior to the appraiser visit of the home so there is no delay in closing or added expense.

Finally, we will cover the difference between MPR or Minimum Property Requirements and MPS or Minimum Property Standards. Minimum property requirements are related to existing homes while minimum property standards by comparison refers to new construction only.