FHA Single Family Housing Policy Handbook 4000.1, Part II — c. Property Eligibility (05/08/2025)

FHA Single Family Housing Policy Handbook 4000.1, Part II — c. Property Eligibility (05/08/2025)

c. Property Eligibility (05/08/2025) i. Appraisals An appraisal is not required for the origination of a Title I Property Improvement Loan. An appraisal may be required in the event of a Release or Substitution of Security. ii. Eligible Improvements (A) Standard The loan proceeds must be used to finance eligible property improvements and Financeable Fees and Charges. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 2. Property Improvement Loan Program Handbook 4000.1 915 Last Revised: 11/26/2025 The improvements must substantially protect or improve the basic livability or utility of the Property. In general, improvements must be permanent, hard wired or hard plumbed to the Property. The Lender must carefully review the list of eligible improvements below to confirm that a proposed improvement is eligible. The loan proceeds may only be used to finance improvements that are started after loan approval. If the Lender determines that emergency action was needed to repair damage resulting from a disaster in a major disaster area declared by the President, the Lender may grant an exception to the standard. Other emergency actions taken up to 30 days prior to the application will be eligible when necessary to protect the home from damage, such as furnace replacement, plumbing or roof leaks. The improvements must not include any leased component, including any energy systems, not fully owned by the Borrower. (B) Required Documentation The improvements must be specified on the URLA (Fannie Mae Form 1003/Freddie Mac Form 65). The Lender must obtain supporting documents to determine if all improvements are eligible for Title I financing and to determine the reasonableness of the cost for the material and labor described. (C) Use of a Contractor If the Borrower plans to use a contractor to complete the improvements, the Lender must obtain a copy of the proposal or contract that describes in detail the work to be performed and the estimated or actual cost. (D) Borrower Acting as Own Contractor If a Borrower is acting as their own contractor, the Lender must obtain a detailed written description of the work to be performed including the materials to be furnished and their estimated cost. A Loan may include financing for the cost of technical tradesmen or other subcontractors hired by the Borrower, but it may not include financing for the Borrower’s labor. This documentation must be presented in the form of a budget and include: • the quantity and cost of materials; • the size, type, style, grade, color, etc. of materials; and • the type and cost of subcontracted labor, if applicable. The loan proceeds must not be used to compensate the Borrower for labor performed. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 2. Property Improvement Loan Program Handbook 4000.1 916 Last Revised: 11/26/2025 (E) Eligible Property Improvements Eligible Repairs and Improvements • abutments • acoustical tile • additions to Structures • air conditioning (central) • alteration • aluminum panels • appliances, when part of an overall remodeling project that includes substantial changes or upgrades to the rooms in which the appliances are placed • asphalt siding • attic fans • auditoriums • awnings (aluminum, canvas, plastic, wood) • back bars • barns • basements • bathrooms (fixtures and connections) • bathtubs (enclosures) • bins (coal, grain, concrete) • black topping • blinds (venetian, vertical) • blowers (furnace) • boathouses • boat slips • boilers • bookcases (built-in) • brick shingles or siding • built-in kitchen equipment • bulkheads • bunkhouses • burglar alarms • burglar bars/decorative bars • burners (furnace, oil, gas) • cabinets • canopies • carpet; wall-to-wall • carports • casements; window • laundry chutes • laundry tubs • lightning rods • meters, electric and water, gas (replacement only) • molding • painting • paneling • papering • partitions • patios • pavers • paving • piers (not for common use) • pillars • plastering • plumbing • pole barns, permanent foundation • porches • pumps • radiators, permanently installed (covers not eligible) • railings • registers, heat • reservoirs (not for irrigation) • resurfacing • retaining walls • roof coating • roofing • safes/vaults (permanently affixed) • sandblasting • sanding • sashes • screening • seawalls (non-floating) • security system, hardwired into electric system • sewerage systems • septic tank - replacement of existing II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 2. Property Improvement Loan Program Handbook 4000.1 917 Last Revised: 11/26/2025 Eligible Repairs and Improvements • ceilings • cellar; storm, wine • cesspools • chimneys • choir lofts • churches (Structure only) • chutes; coal, grain, laundry • cleaning, steam, before painting • cold storage rooms • coating; roofing • commercial buildings • composition; flooring paneling, shingles, siding • condominium, Single Family - $25,000 (interior improvements or exterior improvements, provided they are not common area improvements and are part of the Property unit) • converting; structural • co-op, cooperative (inside improvements only – maximum loan amount is $7,500) • cottages • curbing (Single Family Property only) • decks, gazebos - not for hot tub use or around a swimming pool • docks • door chimes - not for common use • doors (storm, screen, fire) • downspouts • drain fields – septic • drilling; wells (must be a Structure on Property and previously had water supply) • drive-in (Structure only, not trade fixtures or equipment) • driveways • ducts • duplex (lot and both dwellings owned by same person = multifamily loan limits, $24,000) • electric garage door opener (hard wire) • electric light fixtures, lines, poles • electric light systems • shingles • shower doors • shutters • sidewalks (private) • siding (cement, ceramic tile, brick, wood, aluminum) • sills • silo • sinks • slating • smokestack • solar and wind energy systems • sunspace/solarium - permanently installed for use as a sun room, family room • spa – permanently installed inside the Structure • sprinkler systems, fire • stairs • stalls • steam cleaning • steeples • stokers • stone siding • storm cellars • storm panels • stuccoing • studding • structural changes • tanks; fuel (residential Property only, not commercial); milk, septic, storage, water • tiles (ceiling, ceramic, cement, floor (permanently affixed, plastic, acoustical) • termite control, with replacement of damage • trees (diseased or damaged and hazard to Structure on Property) • trestles • troughs II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 2. Property Improvement Loan Program Handbook 4000.1 918 Last Revised: 11/26/2025 Eligible Repairs and Improvements • elevators • escalators • exhaust fans • exterior finishing work • fans (permanently attached to Structure, non-window) • fences (chain link, brick, wood, iron) • finishing work • fire escapes • fireplaces (indoor) • floodlight (non-display) • flooring • flour mills, sheds • flues • foundations • fronts, commercial buildings or residential Structures • furnaces; coal, floor, gas, oil • garages • garbage disposal units • gas heating systems • gazebo, on permanent foundation • generators, permanently installed • glass tinting • grates, furnace • guard rails • guttering • heat control devices • incinerators • insulation • interior work • ironing board, permanently installed • Jacuzzi, inside bathroom • jalousies • lattice work • utility building (sheds); permanent masonry /concrete foundation • vaults • venetian/mini blinds • ventilation hoods • ventilation systems • vents • verandas • wall heaters • wallboards • walls • warehouses • washtubs • water conditioners permanently installed in plumbing system (purifiers, softeners, sterilizers) • water coolers (permanent) • water heaters • water systems • water tower • water wells (must have Structure on Property and previously had water supply) • waterproofing • weatherstripping • wells (together with pumping and piping equipment) • Special Energy System (e.g., solar, wind) (eligible only for furnishing power to residential Structure) • windows (screen, storm, thermal) • wiring; electric • wood shingles (siding, paneling) Other improvements that comply with the Eligible Improvement Standards are acceptable. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 2. Property Improvement Loan Program Handbook 4000.1 919 Last Revised: 11/26/2025 iii. Ineligible Improvements Ineligible Improvements refer to improvements or products that do not become a permanent part of the Real Property and improvements or products that are considered luxury items. The following products and improvements are ineligible and may not be financed with a Title I Property Improvement Loan: • air conditioner (placed in a window, and not permanently affixed to the Property) • asbestos siding • barbecue pits • barn cleaners • bath houses • cabana room • clothes lines and poles • commonly owned elements of condominiums, apartments or cooperatives • debt consolidation • deck around swimming pool • demolition (Structure must be replaced at the same time) • dishwashers (portable), must be part of the sink • docks, floating • drills (equipment type) • dumbwaiters • equipment (industrially; farm or dairy) • exterior hot tubs, saunas, spas, or whirlpools baths • fire extinguishers • flower boxes • food mixers • freezer (stand-alone) • grandstands • greenhouses (except commercial) • hangars (airplane) • hay dryers • irrigations systems • kennels • landscaping • lathes • moving Structures (eligible if move is on the same lot) • orchards • outdoor fireplaces • ovens (must be built in) • penthouses (must be an existing penthouse for improvements to be eligible) • photomurals • satellite dishes II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 2. Property Improvement Loan Program Handbook 4000.1 920 Last Revised: 11/26/2025 • swimming pools • swimming pool enclosures • tree surgery/removal (eligible if tree is diseased and a hazard to the Structure) • television antennae • valance boards • waterproofing (pumping or injecting any substance in the earth adjacent to or beneath the foundation or basement floor) iv. Property Assessed Clean Energy Properties which will remain encumbered with a Property Assessed Clean Energy (PACE) obligation are not eligible for Title I Property Improvement Loans.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part II — c. Property Eligibility (05/08/2025) · source URL · snapshot 8c03836f77f317e1