What You Need to Know About Lead Paint and FHA Loans
This push to eliminate lead paint hazards is not new; every year HUD announces similar grants and protective measures. And that may lead some house hunters to wonder if they should be concerned about lead paint exposure or similar hazards while searching for a place to live.
FHA home loan rules have specific guidelines for lead-based paint, but not all homes will be affected by such requirements. Generally speaking, house hunters looking at brand new construction won’t be concerned as lead paint isn’t allowed in U.S. home construction and has not been legal since 1978.
But not all homes eligible for purchase with an FHA mortgage are newer than 1978. What does the FHA Single-Family home loan rulebook, HUD 4000.1, say about lead paint issues in houses built in 1978 or earlier?
The lender is required to make sure certain steps are taken and certain expectations met in these cases. From HUD 4000.1:
“If the Property was built before 1978, the seller must disclose any information known about lead-based paint and lead-based paint hazards before selling the house...” and the borrower must be provided with EPA information on lead paint hazards.
FHA borrowers in these situations must be given a 10-Day period “before becoming obligated to purchase the home to conduct a lead-based paint inspection or risk assessment to determine the presence of lead-based paint or lead-based paint hazards”. Borrowers also have the right to waive the opportunity to do this.
If a home is appraised as part of the FHA home loan process and it is determined that the home has a peeling paint issue AND the home is built on or before 1978, certain lead paint abatement measures may need to happen as a condition of home loan approval.
And don’t forget that FHA loan rules are not the only ones that have a say where environmental hazards like lead paint are concerned. You may also be required to satisfy state or local building code, certain federal laws that apply to lead paint outside the requirements of the home loan transaction you’re involved with.
You can also ask your loan officer what is typical in cases where lead paint has been an issue in the past; what have other home loan applicants had to do when the lead paint rules for an FHA mortgage transaction apply? You can learn a lot based on past experience.
FHA Loans Have Eligibility Requirements
The U.S. Government Backs Mortgages Through the FHA
Financed Properties Must Meet FHA Minimum Standards
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