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FHA Repairs

Did you know that appraiser required repairs may be financed into an FHA loan?

Costs of repairs can be added to the sales price before calculating the mortgage amount if:

• the repairs are required by the Appraiser to meet HUD’s MPR;
• the repairs are paid for by the Borrower; and
• the sales contract or addendum identifies the Borrower as the party responsible for payment and completion of the repairs. Up to the maximum allowable amount. Seller can pay for additional repairs.

The maximum amount of repair costs that may be added to the sales price is the lesser of:

• the amount by which the value of the Property exceeds the sales price;
• the Appraiser’s estimate of repairs; or
• the amount of the contractor’s bid.

See FHA Handbook 4000.1. II.A.2.a

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