The Federal Housing Administration's name might imply its job is to make certain Americans have housing. In fact, its primary purpose is to keep the multi-billion-dollar housing industry moving money. One way they do this is through the New Home Warranty program, which protects lenders from default on the part of a homeowner or builder. To qualify for this program, a particular property -- or proposed property -- must meet specific standards for different aspects of the warranty.
This applies to newly constructed homes, or to homes bought before completion. In both cases, the builder must sign a Warranty of Completion (HUD 92544). This arrangement promises the work will be completed, and that it will be done just like the filed plans demand. Without this guarantee, new construction poses too much risk of builder malfeasance to make warranty affordable.
Before the FHA will insure any property with a Warranty program, that property must pass a basic home inspection. This will be almost identical to the home inspection required by any lender and consists of confirming the building is to code, free of structural problems, safe and durable. The list of FHA-approved inspectors can differ from locally accredited inspectors, but many professionals carry both qualifications to increase their potential client base.
Claim Requirements -- Coverage
FHA New Home Warranties protect lenders from default by allowing you to file a claim to recoup losses from poorly constructed or damaged homes. In this way, it's like any other warranty or extended service plan. Items covered by the warranty include electrical systems, HVAC, plumbing, structure, doors and windows, trim and siding. FHA coverage specifically does not cover appliances, small cosmetic damage or any component covered by a manufacturer warranty. Coverage for different parts of a home will have different time and value limits from one another, and coverage can also differ between individual warranties.
Claim Requirements -- Documentation
Warranty providers will demand proof of any losses you claim. This means you'll need to show them documents like photos, receipts, estimates or a log. You will file with the warranty provider, who in most cases will send out an adjuster to assess the damage and the validity of your claim. In this situation, the requirements for the warranty are just like those for any other kind of homeowners insurance claim.
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