Can You Get A Mortgage On A House With Dry Rot

Published on August 26th, 2022

Generally speaking, dry rot and dry rot spores are not good news for both the buyer and homeowner. Dry rot and wet rot occur when there is excess moisture or wetness in a home.

This can cause damage to the structural integrity of the home, fungal growth, and serious health issues if left untreated. If the home you are looking at purchasing has been affected by dry rot, will you be able to get a mortgage?

Assessing the Damage and Potential Dry Rot Repairs

Depending on the level of dry rot growth, dry rot treatment and structural damage made to a home, dry rot might be hard to find or very obvious. Dry rot spread can happen rapidly on places like wood decks, damp roofs, leaking roof, other wooden structures, and pressure-treated lumber from overflowing water from blocked gutters.

Dry rot spreads fast where there is a high moisture content creating fungal spores and decayed wood. Quickly treating dry rot and the affected area for dry rot fungus is essential.

Why You Should Have a Home Inspection Even if the Home is in the Early Stages of Dry Rot

Having a home inspection done to look for this wood destroying fungal infection is an essential part of the home buying process. A home inspector will know what to look out for, including evidence of a burst pipe that could have been poorly repaired, areas of replacement wood, large mushroom-like structures growing on the exterior of the home, a musty odour, mycelium growth, cotton wool, cuboidal cracking and other tell-tale signs on wood that could indicate a serious problem.

If dry rot is caught early and has not penetrated deep into the wood, a chemical treatment could treat the building and prevent dry rot spread on timber.

Obtaining a mortgage on a home with dry rot can pose a big challenge depending on the spread and structural problems that the home has. As potential buyers of a home, you need to consider if you will be able to get home insurance, pay for repairs, and still have enough left over for your mortgage payment.

Many lenders will have difficulty providing you with the money to buy properties with any type of rot that has caused serious damage to the property. This is due to the fact that the price you are paying for the home doesn't line up with full market value now because of the rot.

Simply put, it's not a good or smart investment for the bank in a serious case where a property is heavily damaged by dry rot.

However, if you can't become a cash buyer, there are other types of mortgages besides a more traditional conventional mortgage that you could try to apply for if your dream house is a house with dry rot.

These include rehabilitation loans through Fannie Mae and the Federal Housing Authority, or you could try to get a reduced mortgage on the property once the seller can fix dry rot spots or the dry rot treated areas show signs of improvement.