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Second Stove in basement - FHA Loan

Regular Contributor

Second Stove in basement - FHA Loan

I'm currently looking at a house that has a large main kitchen upstairs and a small kitchen in the basement with a gas stove. My real estate agent and mortgage person both said this maybe an issue for FHA. The current owner does lease the basement out but it's not a legal apartment. Really it's just a finished basement with a kitchenette. 


I have ZERO desire to ever lease that space and actually could care less about the kitchen even existing down there. The appraisal has already happened but we're waiting to hear back. What are the possible issues with that second stove? If FHA says it's an issue could it be remedied by them simply making a condition of the mortgage be that we have the stove removed before closing? Do you think they will flat out turndown the loan?  


My mortgage guy thought maybe just a letter to FHA stating it's simply more living space for the house and not an apartment and that I do not plan on treating it as an apartment. 


I know we have some FHA gurus on here........what do you think? 

Message 1 of 9
Valued Contributor

Re: Second Stove in basement - FHA Loan

Do you know what the appraiser has said about the basement kitchen?


My husband is a real estate appraiser, and he tells me the following:


If he was appraising this property for a loan based on an owner-occupied single family status, he would require that the kitchen be removed...appliances, cupboards, etc. He would also require that any separate gas or electric meters be removed and that the appropriate lines be capped off.


He also tells me that the lender can override the appraiser's recommendations. The letter you mentioned about intent of usage would not satisfy the appraiser, but if the lender would accept it, great. The appraiser has to cover himself, but the lender can choose what to accept.


Then again, the appraiser could overlook all of this. The quality of the appraisal comes with the luck of the draw. Sometimes there are things you want appraisers to overlook...and sometimes you hope they're doing their jobs.


Keep us posted as to what they want done...if anything.

Message 2 of 9
Regular Contributor

Re: Second Stove in basement - FHA Loan

Not sure what the appraiser has said yet. Still waiting for the report which should be Monday. This is zoned as an owner-occupied single family home and regardless of the kitchenette being there or not will be lived in as an owner-occupied single family home. 


Would it be cool to have a little kitchenette in the finished basement? Yeah


Do I really care if it was there or not? No


Do I (or the seller) want to put a dime into removing a perfectly good kitchenette? Absolutely not. 


That's why I'm hoping if it comes up it's not the entire kitchenette that needs to go and just the stove. Both my real estate agent and mortgage guy both thought the stove was the only real issue. So who knows.....we'll see what they say and I'll keep you updated.




Message 3 of 9
Valued Contributor

Re: Second Stove in basement - FHA Loan

I agree with how you feel.


Even though I'm married to a real estate appraiser, I think they often have to call for silly things. I try to remember that it's not their rules...if they appraise to FHA standards, it gets pretty nitpicky.


Sometimes when we go to a community function, I ask my husband to let me know if there is anyone there who he hasn't pi**ed off yet.


I do, however, also try to remember about the times he saves someone from overpaying by thousands for a home. Or buying a home with a bad roof. Or a well that does not meet standards. It works both ways.


I'm curious to see how this comes out.

Message 4 of 9
Regular Contributor

Re: Second Stove in basement - FHA Loan my head how this plays out has NOTHING to do with how I feel about the appraiser. You're absolutely correct in that they're not there to pass judgement but simply to report what they find based on criteria that the lender establishes for them. 


It's the lender I'm much more interested in and how they are going to deal with the news. 


I spoke with my agent last night who was there for the appraisal. She said the legality of the "apartment" came up and she said she "dodged" a little by commenting that the space had been there for at least 20 years as the bedroom (the 4th)  has been included in the sale of the house for at least the last three sales. The current owner commented that the space was there when he bought it and that he only decided to rent the space after he had trouble with the mortgage but before that time he and the previous owner used it as a finished basement.


My agent also said she thought there are different rules within our town for seniors in terms of the legality of this space. They relax zoning for seniors to do things like rent out basement space to help keep them in their homes if they're having trouble. She's going to town hall to see if this is considered a legal apartment based on the current owners age? If it is then our story is it is a legal apartments based on the current owners age, it would not be a legal apartment based on my age and we are not going to use it as such.


Any who......only time will tell. Keep you posted. 

Message 5 of 9
Regular Contributor

Re: Second Stove in basement - FHA Loan

So appraisal came back with an "illegal kitchen in basement" but appraised for more than our offer. Three days in underwriting and we got the approval today on the condition that the stove is removed before closing. Not a big deal and we close in 3 weeks! 

Message 6 of 9
New Member

Re: Second Stove in basement - FHA Loan

Glad to see this.  I got an appraisal for my refi and he noted my "illegal kitchen"...I put an addition on with permits for  a guest suite.  I have a bar area, with a sink, (not on the plans) dishwasher, microwave, and stove in the pictures the appraiser took....I told the loan officer about this when I was concerned about the on site appraisal, and she said they just use the appraisal for themselves.......still haven't closed yet and am nervous about getting it finalized....feel like a criminal just trying to live in my own home comfortably as now I have to share with my adult daughter due to the economy.  Got appraised for $385K but only refinancing for $270K, and have been with this mortgage company for more than 15 years.  Will let you know how it goes....maybe I should have done the refi before I put in my "secret kitchen"??

Message 7 of 9
Regular Contributor

Re: Second Stove in basement - FHA Loan

Just a note to this thread that it might pay to double-check with your city planning entity about the current climate for Accessory Dwelling Units (ADUs).  Many cities are reconsidering and relaxing the prohibitions against these "illegal" apartments, in order to increase density without sprawl and provide for multi-generational and senior housing.  My city changed their zoning laws last year to allow for ADUs, and it's possible that any older units you are looking at could be "grandfathered" in.


of course, don't expect the FHA requirements to catch up as quickly, although it's my understanding, for instance, that FHA 203k loans can be used for adding an ADU.

Message 8 of 9
New Member

Re: Second Stove in basement - FHA Loan

Had the closing last week and everything is all set!! 


took a while, but glad I don't have to get a special variance to live comfortably in my own home. 

Message 9 of 9