Can You Get A Mortgage On A House With Mold?

Published on August 26th, 2022

Purchasing a home with any kind of issue can be intimidating, let alone a home with mold growth. Mold issues cause a host of various health issues and can cost a few hundred dollars to thousands of dollars for proper mold remediation.

If you find mold in your dream home during a home inspection - then what? Many mortgage lenders and real estate agents will tell you that securing a mortgage and moving forward with your purchase will be more challenging than before, but it can be done. So, how does the presence of mold affect your being able to get a loan from a lender?

Throughout this article, we will discuss what mold growth is, where it comes from, why you should hire a mold expert, and what your options will be for obtaining a mortgage when all is said and done.

What Mold Growth in a House can Do to Your Health

During your option period, it is vital that you conduct a property inspection, and your real estate agent will agree that it is one of the most important steps in a purchase. Many loans, including an FHA loan, actually require you to have an inspector to try to uncover any potential red flags, telltale signs, or warning signs in the home.

Mold problems can come in different forms and different types of mold. A common type of mold problem is mold spores and black mold. Black mold is found in the area of your home that has been subject to excess moisture causing mold growth. These damp areas are often characterized by a musty smell and can include a crawl space, walls, a basement, air ducts, the HVAC system, drywall, gypsum board, and fiberboard in an area with previous water damage and water spots. These are all areas that a home inspector will look for mold.

Common symptoms of mold-related issues include a sore throat, an allergic reaction, watery eyes, asthma attacks, and a host of other health issues in most people, according to the environmental protection agency, better known as the EPA. These types of homes subject you to undue mold exposure and can be very harmful to those with compromised immune systems.

The Cost of Dealing with Mold - Should the Seller Pay?

In many instances, depending on where you live and if you're looking at purchasing vacant homes or not, the seller might agree to pay for some of the mold remediation. If left unattended, mold growth will continue to spread throughout the house, cause more damage to environmental issues, and lead a seller to face legal consequences from the local authority if their property is tenanted.

Mold removal and mold testing aren't always expensive, but prepare yourself for some high costs just in case. A mold inspection can cost anywhere from $100 up to $700 and may be required by your mortgage lender, depending on the type of loan you have applied for.

If the mold inspector uncovers hidden mold, then you can expect mold remediation costs to be anywhere from $1,500 to $3,000. Buyers need to be aware that not every seller will agree to pay for these inspections or mold repairs, which can affect your mortgage, but how?

Unless you can pay cash for the house, you're interested in purchasing, which many buyers cannot, then having mold present can cause a huge financial issue. Most lenders will require that the house you are purchasing be habitable before they give the final approval on your mortgage loan.

Buyers who find themselves in a situation here they can't afford mold repairs and a seller won't pay for them can check with their mortgage provider to see if they will offer a renovation loan on your potential property.

Some of the types of renovation loans would consider applying for if your home has a mold issue include:

• Fannie Mae Homepath Renovation Loan: This loan will give you as the buyer the flexibility to meet your borrower's needs, stay within your monthly mortgage payments, and have extra money to complete needed repairs to make the home habitable. Before approval on this mortgage, you will need to submit a detailed plan of action for how you will repair the property to your lender and work with a reputable contractor. Then your lender will either approve or disapprove of your plans.

• FHA Loan: Not every FHA loan will accommodate a home with mold, but some do! If mold is in your home and detected by an FHA appraiser, the appraiser will make a note of it and provide helpful recommendations on how to fix the problem and how to proceed with your mortgage.

These are just two of the many ways that you can obtain a mortgage on a home that has mold. Before jumping on a home with mold, be sure to consider all of the consequences and potential cost you could encounter throughout the sale process. The presence of mold is nothing to mess around with and should be top of mind when beginning your home search.

If you're considering buying or selling a home with other issues, please be sure to check out our blog for more information.