HUD home passing inspection

[Jason Ligon]

My wife and I have been looking at houses for about 3-4 months now. This will be our first house and we've been approved for an FHA 203(b) loan. It's been a rollercoaster process for us. We've found 2 houses we liked that eventually didn't work out for various reasons. We've just got back from looking at a HUD house tonight that we love. It rained really hard yesterday and today and we noticed that the basement has a leak on one side of the house. Everything else with the house is great minus some spotty carpet and garage door panel needing repair. Our realtor told us that we would need to go with a conventional loan if we wanted to bid on this house because of the leak in the basement. He said it wouldn't pass inspection with FHA loan. My question is this.... the house is already listed on the hudhomestore. The website says that an apprasial was completed Sept 25th of this year. The house is listed as insurable w/ repair escrow (IE). The property condition summary lists the following garage door needs replacing ($1000) + repair plumbing (water line leaks) ($1000). So that's only $2000 that could be rolled into our 203(b) loan. The question is why would our realtor tells us that it wouldn't pass FHA inspection if it's already been inspected and those were the only two things on the report. Does FHA inspect it more than once. I think they will come out and look at the 2 repairs (garage and plumbing) that would need to be fixed within 90 days of closing. Tonight is the 5th day of bid submissions which I think would give us the best opportunity of getting the house if we were to put in a bid tonight (right?). Is our realtor right or does he have it wrong?

[Mark Ferguson]

I think you know more than your realtor! The FHA 203b loan allows for up to $5,000 in repairs that is rolled into your loan. The FHA appraisal is already done and the appraiser signed off that it will go FHA with those repairs. If you want you can even add repairs if needed. You have to have a leder from your lender saying the repairs are required for loan and two bids from licensed contractors.

You can go FHA on this house without any new appraisals or jnspections from your lender.