FHA Quick Tips
Minimum Property Requirements (MPR) and Minimum Property Standards (MPS)
For new construction to be eligible for FHA financing, it must comply with HUD’s Minimum Property Standards (including 24 CFR 200.926d). Existing construction must comply with HUD’s
Minimum Property Requirements (HUD Handbook 4905.1). .
In the performance of an FHA appraisal, the appraiser must denote any deficiency in the appropriate section(s) (site issues in the site section, improvement issues in the improvements section) of the appraisal report. The appraiser is to note those repairs necessary to make the property comply with FHA’s Minimum Property Requirements (MPR) or Minimum Property Standards (MPS) together with the estimated cost to cure. The lender will determine which repairs for existing properties must be made for the property to be eligible for FHA-insured financing.
Cosmetic repairs are not required; however, they are to be considered in the overall condition rating and valuation of the property. Examples of cosmetic repairs would include surface treatments, beautification or adornment not required for the preservation of the property. For example, generally, worn floor finishes or carpeting, holes in window screens, or a small crack in a windowpane are examples of deferred maintenance that do not rise to the level of a required repair but must be reported by the appraiser.
The physical condition of existing building improvements is examined at the time of the appraisal to determine whether repairs, alterations or inspections are necessary - essential to eliminate conditions threatening the continued physical security of the property.
Required repairs will be limited to necessary requirements to:
• protect the health and safety of the occupants (Safety)
• protect the security of the property (Security)
• correct physical deficiencies or conditions affecting structural integrity (Soundness)
A property with defective conditions is unacceptable until the defects or conditions have been remedied and the probability of further damage eliminated. Defective conditions include:
• defective construction
• other readily observable conditions that impair the safety, sanitation or structural soundness of the dwelling
Typical conditions that would require further inspection or testing by qualified individuals or entities:
• infestation – evidence of termites
• inoperative or inadequate plumbing, heating or electrical systems
• structural failure in framing members
• leaking or worn-out roofs
• cracked masonry or foundation damage
• drainage problems
Appraisers are reminded not to recommend inspections only as a means of limiting liability. The reason or indication of a particular problem must be given when requiring an inspection of any mechanical system, structural system, etc.
These guidelines are provided to assist in the examination of the property. To perform this analysis, the appraiser must have full access to all property improvements.
If unable to visually evaluate the improvements in their entirety, contact the lender and reschedule a time when a complete visual inspection can be performed. This includes access to the crawl space and attic. The appraiser is not required to disturb insulation, move personal items, furniture, equipment, plant life, soil, snow, ice or debris that obstructs access or visibility.
An inspection done in accordance with these guidelines is visual and is not technically exhaustive. These guidelines are applicable to buildings with four or less dwellings units and their related property improvements.
