What is the smallest house you can purchase with an FHA loan?

I’m appraising a house right now that is nearly 400 square feet (the size of a 2-car garage). Would this house qualify for FHA financing or is it too small? Put your Jeopardy skills to the test because I have a quiz for you below.

hobbit houses in new zealand - sacramento appraisal blog

What is the smallest house you can purchase with an FHA loan?

A) 500 sq ft
B) 666 sq ft
C) 300 sq ft
D) 400 sq ft
E) Other

There is only one correct answer above, and if you guessed “Other” you are correct. Straight from the HUD Handbook, “FHA does not have a minimum square footage requirement for a home to be eligible for FHA financing (except that a manufactured home must have a minimum size of 400 square feet to qualify for FHA financing). FHA only requires that a home be marketable in the area and have adequate space necessary to assure suitable living, sleeping, cooking and dining accommodations and sanitary facilities.” Handbook 4905.1 REV1, Section 2-9

I hope this was helpful. If you’re looking for more information on FHA property or appraisal standards, you can check out other FHA appraisal articles I’ve written.

Bonus Question: Is it possible to get an FHA loan on a hobbit house as pictured above (or any below-grade house)? I’d love to hear your take. The answer will be found in discussion in the comments.

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Does a property with a flat roof require a roof inspection for an FHA loan?

It depends. A roof really only requires an inspection during an FHA loan if the appraiser or underwriter calls for an inspection. This goes for both flat and pitch roofs. Let’s read a bit more below.

flat roof inspection for an fha loan - by Sacramento Appraisal Blog

Straight from HUD on whether an appraiser will automatically require a roof inspection on a flat roof (Mortgagee Letter 05-48):

FHA-photo-by-Ryan-LundquistFHA no longer mandates automatic inspections for flat or unobservable roofs. In the appraisal report the appraiser will note any evidence of deterioration of roofing materials (missing tiles, shingles, flashing). Deteriorated roofing materials include those that are worn, cupped, or curled. If the roof is not observable, the appraiser will look for and include in the appraisal report any telltale signs of roof problems on the interior, such as damage or water stains to the ceiling area of a room or closet. The appraiser must note in the appraisal report that he/she could not adequately observe the entire roof area (state which area(s) were unobservable). Based on the information reported by the appraiser, the lender’s underwriter will determine whether or not a roofing inspection is required.

Summary & Attics: All things considered, a flat roof on any portion of a house won’t necessarily trigger a roof inspection, but an inspection may be required if there are signs on the interior or exterior that point toward roof failure. Remember, a roof has to have at least two years of remaining economic life for an FHA loan. On a related note, the appraiser is required to do a “head and shoulders” inspection of the attic, but when the roof is flat and there is no attic, this requirement obviously doesn’t apply.

I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written, and definitely comment below if you’d like.

Anything you’d like to add or ask?

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

Do appraisers really have to inspect the attic for an FHA loan?

If you have an attic and you’re getting a FHA loan, the appraiser is going to have to do a “head and shoulders” inspection of the attic. This means the appraiser will at minimum need to poke his/her “head and shoulders” in the attic for a quick view.

FHA before and after attic access by appraiser - Sacramento Appraisal Blog

What if the attic has been sealed off? If your attic access has been covered (or the appraiser cannot access the attic due to clutter in a closet), you will have to provide access to the appraiser at some point before the loan closes. For instance, the attic above on an investor flip was previously sealed for whatever reason, so the owner had to install a scuttle after my original inspection so I could fulfill the attic inspection requirement by FHA. Obviously if a house does not have an attic due to a flat roof, an attic inspection is NOT required.

For reference, FHA loans make up about 20% of sales in Sacramento County under $200,000. While this number is currently down from about 30% one year ago, FHA loans are still happening very regularly.

What are appraisers looking for in an attic? Watch the video above (or here) for a bit more information on what appraisers are looking for during an attic inspection. I shot this video a couple of years ago.

I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written, and definitely comment below if you’d like.

presentation for SAR - copyright Ryan LundquistEVENT THIS WEEK: By the way, this Friday March 1, 2013, I’ll be speaking at Sacramento Association of REALTORS at 9:30am at the Industry Update meeting. We’ll have some great discussion for an hour. All Realtors and SAR affiliates are welcome. Click the thumbnail image to view the first page of my talk.

Question: Have you ever been in your attic?

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

The reason why I look under kitchen sinks

I don’t know about you, but there are two reasons why I don’t let my kids play under the kitchen sink: 1) There are too many chemicals, so it’s an obvious safety issue; and 2) I honestly can’t stand to work under the sink, so I don’t want my kids to mess anything up, which might cause me to have to spend time there. After installing a new kitchen faucet recently, I vigorously stand by this point.

In truth, after inspecting thousands of homes, I can safely say the space under the kitchen sink can often be dark, cluttered and even dank. Other than checking for a garbage disposal, I always look in this area because it can be a hot spot for issues that need to be resolved (often quick and easy repairs).

Under the kitchen sink - photo by Sacramento Appraisal Blog

It’s okay if things are not tidy under your sink. But when I do see an “unknown blackish substance,” it’s something I need to disclose in the appraisal report. I never say “mold” as an appraiser because I’m not a mold specialist, but when I do see something like the photo above, I require the issue to be cured. It’s probably a very quick fix and a sincerely minor issue, but I can never make that assumption. The photos above are before & after shots from an FHA loan, and I simply disclosed there was an “unknown blackish substance” under the kitchen sink, and it needed to be cured. I was careful not to call the substance mold, fungus or even say it was growing. I did recommend further inspection by a qualified professional, and I included a standard disclaimer about reserving the right to change the appraised value in light of new information.

In the example above, the issue was easily cured (probably by using some basic products from Home Depot) and the loan closed without a problem. This is not usually an enormous red flag issue that buyers and sellers need to freak out about, but it is something that should be resolved.

Four Quick Recommendations:

  1. If you are a buyer, look under the sink to know what is there.
  2. If you are an agent, look under the sink to know what is there.
  3. If you are an appraiser, look under the sink to know what is there.
  4. If you are a seller, be aware the appraiser might call for repairs if seeing something like the photo above. It might be worth curing the problem before the appraiser comes (I’m not saying you should hide the issue if you know you have a mold problem).

Question: Do your kids play under the sink?

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook