FHA Loan Restrictions

8 Replies

I am looking at buying a triplex and living in one of the units. To finance this, I want to go with the FHA 3.5% down route. I know there are some restrictions on what FHA rejects as a property to finance and was curious if anyone knew the restrictions of foundation settling. The house is a little sloped on one side and is pretty noticeable on the third story when walking in the kitchen. The seller has informed us of this issue and has even shown the quote to repair the issue. I believe he bought it with this problem around 10 or so years ago and hasn't done anything to replace it since I guess it wasn't a huge deal.

My question is do you think I will still be approved for this loan with this know issue? It sounds like it has stopped settling and has been like this for awhile with no problem. Or should I look at other means of financing?


I believe 203(k) won’t fix any structural issues and since this is sloping, the house would need to be lifted and new peers installed. Unless you’ve experienced them replacing these damages or financing with known issues like this.

@Austin Hanse

Is the seller refusing to negotiate on this? I feel like there's some sort of compensation that you could agree on for it. 

I looked at a duplex in Fox Park a few months ago that had the same issue. I didn't pursue it bc I didn't have the funds to cover any of the lifting and new peers etc etc. 

Originally posted by @Austin Hanse :

@Bob Okenwa

I haven't. Will they finance structural repairs? Also, do you know if they have low downpayments? I will have to do some research on this type of loan.

They have down payments as low as 3% and I do believe structural repairs can be done, but you'd want to verify what kind of construction is approved with a lender. I know you can't use it for a tear-down and rebuild though.

@Tyson Hosey

No I am just trying to run my numbers to make an offer. I'd like to use the FHA 3.5% down but am not sure if I'd even qualify with this known issue. I guess I can always try. And yeah, the quote for replacing it was around 12-13k. It would be tough to cover this and the down payment because it would deplete all my funds.

@Bob Okenwa

Thanks! I will do more research because that sounds like the way to go. I'd much rather finance this repair.

FHA 203k will do foundation/structural repairs as well.

If you aren't familiar, this is the renovation loan product for FHA. Same 3.5% down payment on total of purchase + repairs.