Questions about FHA Guidelines
I was out with buyers this weekend and one of the homes they like had missing appilances. One of the questions they had is whether or not they would be able to put in an offer with this home considering it was missing them. I had been under the impression that you couldn’t purchase a home with an FHA loan without the appliances.
So I told them let me do a little research on it. And as it turns out I was wrong and I would be the first person to admit when I am wrong. So I decided to go ahead and post the answer here, just in case someone else had the same question.
Now I have decided to go ahead for the next few days to post some question and answers to some FHA guidelines.
Appliances: The Valuation Protocol (page D-26 of Appendix D, Handbook 4150.2) requires the appraiser to note the appliances that are present in the home at the time of inspection and whether the appliance is considered personal property or part of the real estate. The protocol further directs the appraiser to treat non-functioning appliances/equipment as deferred maintenance in the valuation process.
The manner in which an appliance is attached to the dwelling would determine whether or not an appliance should be considered part of the real estate. In some real estate markets, it may be typical and customary for certain appliances to convey with the real estate. In these situations, those appliances should be considered real estate and treated as such in the valuation of the property.
In some cases, such as that of REO properties, all or some of the appliances may be missing and there may be damage to the floor, wall or ceiling finish as a result of the removal. Depending upon the magnitude of the damage, the appraiser is expected to treat the damage to the home as deferred maintenance and reflect such in the conclusion of value. Missing appliances must be addressed by the appraiser in the valuation process, particularly when the comparable sales included a full complement of working appliances.
In cases where appliances are missing and minor repairs may also be needed, lenders are encouraged to have the borrower take advantage of the Streamlined 203(k) loan product, which has no minimum repair cost threshold and is designed to cover such improvements/replacements.
Jeannette Neerpat
Helping you Find Your Way Home!
Thanks for this information. I get asked this a lot. This was a question I always referred my clients to their banks.
I would use the 203B for the appliances! The reason for this is that there is a % of interest added to the 203K and as long as you stay under $5000.00 you can get the 203B and save money. The 203K is for major repairs over the $5000.00. Also a 203K takes alot longer to close than a 203B reason being is it typically goes through a different bank like BOAmerica no matter who the lender is direct or not.. I have a high volume of buyers and all have been more satisfied with the B instead of K! Just some input!
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