Does My House Qualify for an FHA Loan?

by Ciaran John ; Updated July 27, 2017

The Federal Housing Administration insures mortgages written against a variety of different property types including single-family homes, manufactured homes and condominiums. In order to obtain an FHA-backed loan, however, your home must pass a stringent FHA appraisal. Additionally, the FHA has strict guidelines in place for the types of condos and mobile homes that it finances.

FHA-approved Properties

You can use an FHA loan to finance one to four-unit properties that are stand-alone structures, semi-detached or row houses. The FHA only insures primary residences, so if you use an FHA loan to buy a duplex you must live in one of the units. FHA appraisers inspect financed properties to look for safety hazards and you must rectify any problems before closing on the loan. Safety hazards range from cracked windows to faulty electrics. However, if your home needs major repairs you can use an FHA rehab loan to fix up the property, in which case you can close on the loan before commencing the work.

Condominiums

You can finance your condominium with an FHA loan if the condominium complex has received FHA approval. The FHA does not insure mortgages on condos in buildings exceeding four stories. Additionally, the FHA only insures condo loans if over 50 percent of units in the complex are owner occupied and the FHA does not insure more than 10 percent of the condos in any complex at the same time. The same restrictions apply to financing a townhome, unless the county records describe your tow home as a single-family home, in which case condo restrictions do not apply.

Manufactured Homes

You can finance your manufactured home with an FHA-backed loan, but only if your home was built after 1976. Before that time, building codes were less strict and, consequently, older homes do not meet FHA standards. You cannot finance your manufactured home with an FHA loan if it sits in a Federal Emergency Management Agency-designated special flood hazard area. The home must sit above the 100-year flood frequency elevation, which means it is high enough above the ground to avoid any flood damage likely to occur during the next century.

Other Considerations

The FHA does not insure commercial property and you cannot use an FHA loan to finance your primary home if you live in a fraternity or sorority house. Additionally, the FHA imposes loan limits on home financing so you cannot use an FHA loan to buy or refinance a home, if the dollar amount involved exceeds FHA limits. The maximum FHA loan amount varies from county to county, but a limit of $271,050 applies in most areas.