What Does Uninsurable Property Mean?
Uninsurable property is a residential property that cannot obtain insurance through the U.S. Federal Housing Administration (FHA) because it needs major repairs. In extension, it is also likely not eligible to secure a mortgage via the FHA, although there are some exceptional situations wherein the person buying the property may be allowed to apply for an alternative financing arrangement.
Insuranceopedia Explains Uninsurable Property
U.S. Department of Housing and Urban Development (HUD) homes require inspection and appraisal before bidding can commence. The listing classifies a home one of into three categories: uninsurable, insurable, or insurable but with repair escrow. In some cases, HUD may allow financing uninsurable homes under the 203k FHA financing scheme, which offers a reduced valuation of the house, plus the cost of repairs.