- According to the U.S. Department of Housing and Urban Development, FHA loan limits vary from low-cost to high-cost areas, based on the area's average home price. Because that price changes over time, so do the limits on how expensive your home can be. The FHA maintains an online calculator you can use to figure out the loan limits for your community (see Resources).
- Your house is collateral for your mortgage, so the FHA wants to make sure it's in good condition before it insures your loan. HUD states online that until the 1980s, HUD maintained its own standards for FHA inspections. Since then, agency policy has changed. If your community has adopted one of the country's model building codes, the FHA inspector will use the local code. If there's no building code, or one that isn't based on the model codes, the local FHA office will determine what code standards to use.
- Homes that aren't long-lasting will be worth less, which puts the FHA's investment at risk. FHA inspectors will use HUD's minimum property standards to evaluate the durability of doors, windows, gutters, wall coverings, kitchen cabinets, carpets, paint and other elements of the house. A house that doesn't meet the HUD standards may not qualify for FHA insurance.
- Other than durability, the big issues for the FHA are security, safety and soundness. The FHA won't agree to insure a house if the inspector finds, for example, that there's foundation damage, exposed sub-flooring, leaking or worn-out roofing or if the exit route from the bedrooms to the outside isn't adequate for people to get out in an emergency. If the inspector finds problems like these, the owner will have to repair them before the FHA will risk insuring the mortgage.
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