Carpet is neither.
All the Bank is concerned with is AS-IS,
They ask us, "What part of AS-IS do you not understand?
Supposedly, the CONDITION of the house is taken into consideration in the pricing.
Good luck and may God bless
You can ask if the carpet is unsalvageable, but be prepared if they say no.
that said you may get allowances granted as they do not require the bank to do anything more than agree to them.
the FHA has gotten FAR more accommodating in their demands as regard property condition in the recent years. there was a time when an FHA deal was certain torment. the deals they fund are way easier today
No matter what the answer comes back as, FHA loans also require that any health & safety issues be corrected as a condition of final loan approval. I would concentrate your focus on your property inspection report looking for health and safety issues, which are much more important. Perhaps, if health and Safety issues are found, you may be able to bundle in some money for the carpet as well if the first answer was no.
Best of luck, -Steve