Habitability Laws for Mortgage

Many mortgages, especially those insured by the federal government, have habitability requirements. "Habitability" means that the residence is suitable for people to live in, according to certain specific standards. Because these mortgages typically require that you live in the home, it makes sense that the home must be habitable as well. Just like other mortgage requirements, the property must meet the habitability requirements to qualify for the mortgage.

Loan Types

Mortgage programs are available from private lenders as well as from the Federal Housing Administration. Private mortgages and FHA mortgages come from the same mortgage lenders, except that private lenders insure private loans and the federal government insures FHA loans. FHA loan programs offer several advantages over private mortgages, such as low down payments, low closing costs and reduced credit standards. The FHA, however, tends to have more rigorous standards than private lenders when it comes to residency and habitability requirements.


Most FHA loan programs have residency requirements. For instance, a borrower with an FHA-backed mortgage must certify that he will live in the home. The home must be the borrower’s principal residence, as opposed to a second home, a vacation home or a rental property. The FHA defines a principal residence as one where the borrower occupies the home for the majority of the calendar year. If special circumstances exist, such as the borrower is subject to military deployment, the FHA may be able to offer a more flexible program.

Safe Dwelling

If there's a residency requirement, it also makes sense that the FHA also requires that the home meet safe dwelling or habitability requirements established by the Code of Federal Regulations. "Habitability" means that the dwelling meets or will meet -- without having to spend more than 5 percent of the fair market value of the property -- the government requirements. These requirements include heating, an electrical supply, cooking facilities, a supply of hot and cold water, a method of sewage disposal and structural stability that is sound and free of hazards that affect the safety of the residents or impair the use and enjoyment of the residence.

Section 203(k)

Borrowers purchasing distressed homes that do not meet the habitability requirements of a traditional FHA mortgage can purchase a home through the Section 203(k) program. This program is directed toward rehabilitation of single family homes in need of repair. The intent of the program is to help revitalize neighborhoods and expand home buying opportunities. Some state and local governments have created similar programs that can be used in conjunction with Section 203(k).

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