Fairly often we receive questions about FHA heat source requirements.  So recently we received one of the more popular questions from a real estate agent.  “Does a wood burning stove meet the FHA heat source requirements?”  Basically, can a buyer use an FHA loan to purchase a home where the sole source of heat is a wood burning stove?  The Realtor did her homework up-front for her seller by asking a great question.  By asking the question early, it gives the seller the right expectations of an FHA buyer.  So let’s explore the actual FHA heat source rules.  Keep in mind this applies to only certain areas of the country where the weather requires such a rule.

FHA Heat Source Requirements

HUD has a specific definition for an FHA heat source, yet it still creates confusion.  FHA says…

The appraiser must notify the mortgagee if the permanently installed heating system does not do the following.  Automatically heat the living areas of the house to a minimum of 50 degrees Fahrenheit in all gross living areas.  Nor automatically heat non-gross living areas containing builder or system components subject to failure or damage due to freezing.  If it does not provide healthful and comfortable heat or is not safe to operate. Next if it doesn’t rely upon a fuel source that is readily obtainable within the subject’s geographical area.  Finally does not have market acceptance within subject’s marketplace and operate without human intervention for extended periods of time

Does a Wood Burning Stove Meet HUD Heat Source Requirements?

We actually asked an FHA appraiser this question to verify our answer.  The answer is “No” for two reasons.  Heating guidelines state two key phrases “automatically heat” and “without human intervention”.  A wood stove requires a person to load wood into it.  So a wood stove fails both of these heat requirements.  Additionally a portable kerosene heater does not meet several of the FHA requirements.

How to Meet FHA Heat Source Requirements?

There are several ways to meet approval of FHA and the appraiser.  One option is to install a central HVAC system which will heat the entire area house.  But this option is expensive as it requires new duct work and a new system.  An affordable idea is to install a permanently mounted space heater.  If the space heater has a temperature control, connected to a gas tank outside the home, and heats all required areas, then this could be an affordable solution.  These space heaters would allow the wood stove to stay as long as the other heater(s) meets the minimum requirement.  Most gas companies offer installation of these gas heaters at an affordable price.

Central Air Conditioning

Central air conditioning is not required but, if installed, must be operational. If it is not operational, the appraiser must indicate several areas.  These areas include stating the level of deferred maintenance, analyze and report the effect on marketability, and include the cost to cure.

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Lots of FHA guidelines changed effective 9/14/15
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