December 9, 2016
FHA loan rules include minimum standards for the property to be purchased with an FHA mortgage, but state and local building code also has a say in whether a home is suitable. With that in mind, we examine a recent reader question in the comments section:
“I am looking for a townhome with a FHA loan. One complex I have looked at years ago, it is a two bedroom with a loft, next to the loft was a very large storage room, no windows. The seller has turned this room into another bedroom? Electric and all. Should I even bother, for my state can not consider a bedroom a room with no windows? She can remove bed and make it a den? if was a conventional loan would not be an issue, will this be an issue with FHA loan, PS I dont intend to use as bedroom, but den & storage area.”
The problem with trying to answer a reader question like this is that state and local building codes would have a say in whether such an arrangement is acceptable. FHA loan rules, including appraisal rules, address minimum standards but do not have specifics for all state or local building code issues.
Instead, FHA loan rules defer to the local authority on code requirements.
To learn whether a particular building feature, add-on, or issue is acceptable in cases like this it’s necessary to consult a local expert in building code issues. Borrowers may have some luck talking to the lender or a real estate agent with experience in what’s commonplace in the local market.
For example, an experienced agent or lender may know of similar conditions that did or did not pass an FHA appraisal, and based on that information it may be possible to arrive at a more informed conclusion.
Borrowers should know that the FHA appraisal rules do require homes to be safe, habitable, and retain their value for the lifetime of the loan, but the FHA appraisal guidelines are not the final word on what makes a home acceptable. Nor is the appraisal an FHA stamp of approval that a home is free of defects.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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