Are property repairs required prior to closing on a HECM purchase loan?

Properties being purchased using the HECM for Purchase program must meet FHA’s minimum property requirements. Where major property deficiencies threaten the health and safety of the homeowner and/or jeopardize the soundness and security of the property, all repairs must be completed by the seller prior to closing.

Appraisers must complete the appraisal report as “Subject To” the completion of these repairs.

Major Property Deficiency Examples:
• No running water
• Leaking roof
• No primary heating source
• Inadequate electrical systems (including lighting)
• Inoperable doors and windows (inhibited ingress and egress)
• State or local code violations

For additional information see Mortgagee Letter 2009-11 available at

HECM Mortgagee Letters

Handbook 4000.1, Handbook 4235.1

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-04663