FHA & VA Loan Requirements

I’m buying a home with an FHA or VA Loan, what should I know?

When it comes to purchasing a home using an FHA or VA loan, there are some unique inspection requirements you should be aware of:

FHA Loans:

  • If the property is on a Well, you’ll need an FHA Well Water Quality Test performed

    • If public water is available at the street, you may be required to connect to it regardless of well system condition or water quality.

  • If the property is on a septic system, you’ll need an FHA Septic Certification performed

    • If public sewer is available at the street, you may be required to connect to it regardless of septic system condition.

  • The loan underwriters may require a copy of the full home inspection report. The following will be taken more seriously by the underwriter:

    • Damaged or cracked windows, doors, counter tops and other features that are still operable and functioning

    • Missing handrails

    • Poor workmanship

    • Worn floor finishes

    • Deficient paint surfaces in homes completed after 1978 (homes built earlier may pose lead hazards)

  • You will likely be required to have a separate Termite (WDO) inspection performed

VA Loans:

  • You will likely be required to have a separate Termite (WDO) inspection performed

Is an FHA/VA inspection more expensive?

Not necessarily. The base cost of the inspection does not differ from a conventional loan. However the required additional inspection will increase the total cost.

What about the appraisal inspection?

FHA and VA loans also have required appraisals that are more intrusive than a typical appraisal. The appraiser will also be verifying the basic limitations for habitability outlined in the loan requirements. This is mainly to protect the bank, not the borrower.

What Can I Do If a Home Doesn’t Pass FHA Inspection?

  • Have the seller agree to repairs

    • Most items that fail an FHA inspection can be repaired.

    • Consider asking the seller to make some of the repairs to make the home FHA/VA compliant

  • Switch Loan Types

    • Switching to a conventional loan releases you of many of these restrictions, but may not be an option.

Helpful Links:

How To Prepare For An FHA Inspection & Appraisal