When it comes to purchasing a home, the sales contract is perhaps one of the most important documents that you will encounter. It lays out the terms of the agreement between the buyer and the seller, including the price of the home, any contingencies, and the closing date. For buyers who are using an FHA loan to finance their purchase, there are specific sales contract requirements that must be met to ensure that the loan is approved.

One of the primary requirements for an FHA sales contract is that it must be in writing and signed by both the buyer and the seller. In addition, the contract must include a provision that allows the buyer to cancel the contract and receive a full refund of their earnest money if the home does not appraise for at least the sale price. This is because FHA loans have strict appraisal guidelines, and the home must meet certain value requirements in order to qualify for the loan.

Another requirement is that the sales contract must specify that the seller will make any repairs necessary to bring the home up to FHA standards. This includes addressing any safety hazards, such as faulty electrical systems or broken windows, as well as ensuring that the home is structurally sound and free from any major defects. If the seller is unwilling or unable to make these repairs, the loan may not be approved.

A third requirement is that the sales contract must include a provision that the seller will pay for a termite inspection and any necessary remediation. This is because FHA loans require that the home be free from termites and other wood-destroying insects, as they can cause serious damage to the structure of the home.

Finally, the sales contract must include a provision that the seller will provide the buyer with a one-year home warranty. This warranty covers any major repairs or replacements that may be needed during the first year of ownership, such as a new HVAC system or a new roof. This provides peace of mind to the buyer and ensures that they will not be faced with unexpected expenses shortly after purchasing the home.

In summary, if you are using an FHA loan to purchase a home, it is important to ensure that the sales contract meets all of the necessary requirements. This includes provisions for cancelling the contract if the home does not appraise for the sale price, repairs to bring the home up to FHA standards, a termite inspection and remediation, and a one-year home warranty. By working with a knowledgeable real estate agent and lender, you can ensure that your sales contract meets these requirements and that your loan is approved.