When you want to purchase a home with an FHA guaranteed home loan, the property you want to buy must be appraised to determine its eligibility for the loan.
A home that does not meet FHA minimum property requirements may not necessarily be ruled out for an FHA loanâ€“an appraiser may note certain corrections that should be made to bring the home up to standard. In such cases, the loan may be approved contingent on those corrections being made.
â€œRepairs and improvements may be added to the sales price before calculating the mortgage amount when the repairs and improvements are
â€“required by the appraiser as essential for property eligibility, and
â€“paid by the borrower, and
â€“sales contract or addendum identifies the borrower as responsible for payment, and completion of the repairs.â€
The repair and improvement amount that may be added to the sales price before calculating the maximum mortgage amount is the lowest of the
â€“amount that the value of the property exceeds the sales price
â€“appraiserâ€™s estimate of repairs and improvements, or
â€“amount of the contractorâ€™s bid, if available.â€