A reader asks, "My husband and I were just approved for a FHA loan or a RD loan, but we are being told the house doesn’t qualify because the basement only has small windows (no step outs and no door leading outside). The basement contains two bedrooms, a living room and a laundry room. Is there anyway to modify the basement to ensure the house qualifies?"
The FHA appraisal would recommend corrections or repairs in such cases based on FHA minimum property requirements and/or state/local building code. Much depends on building code requirements for your state or local area.
Borrowers who find themselves in these situations would need to consult the local authority to see what is required there-the FHA doesn't keep records of all state or local building code (that would be impossible).
If the property has not been appraised yet, the FHA fee appraiser would likely note any corrections required unless the fixes or changes aren't feasible, in which case the property would not be approved for the loan.
This is a tough spot for borrowers to be in--who wants to pay for an appraisal only to find out the loan can't be processed because the appraiser deems the home to be ineligible for an FHA loan?
Consulting with a custom builder to see if fixes are affordable and realistic is one way to go, but as mentioned above, the home would have to be in compliance with state or local code to be approved for the loan.
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