The Federal Housing Administration helps promote the issuing of mortgages by insuring them against borrower default. To protect its investment, a home purchased with an FHA loan will have to undergo a home inspection by someone approved by the Department of Housing and Urban Development. Among the areas that the inspector looks for is the railings on steps, both whether they exist and whether they meet required standards.
Handrails are no longer automatically required by the FHA -- they're considered cosmetic repair rather than automatic repair requirements. Instead, the appraiser reports the absence and provides input as to whether the lack of a handrail represents a safety hazard. For example, an inspector may advocate that a handrail be installed along open staircases or in other areas where it is deemed necessary to prevent injury, such as surrounding a deck. Local laws and building codes, or HOA regulations, also influence this decision. The inspector will require the property to conform to those standards.
Making the Decision
Regardless of the inspector's personal opinion, HUD notes that the absence of handrails on a staircase should be noted in the inspection report. That leaves it up to the lender and underwriter to determine whether adding a handrail is a requirement for the loan. If you have just a step or two without a handrail, you may not be required to add one. Three stairs or more may require a handrail, whether that's because of state regulations or lender standards.
Just because a railing exists doesn't mean it will pass FHA standards. Unsafe railings can be required to be repaired or replaced as a condition of insuring the loan. Conditions that may make a railing unsafe include termite damage, lead paint that no longer meets safety standards, railings on only one side of an open staircase, or railings too rickety to serve the intended purpose. The inspector also is required to observe and note issues like cracked or peeling paint or decaying wood that could render a railing unsafe. Again, it's then the lender and underwriter who make the decision about necessary repairs.