Spray foam insulation promised energy efficiency and comfort, but for many homeowners, it’s become a surprising dealbreaker. Lenders are increasingly rejecting mortgages on homes with this insulation, sparking new concerns in the housing market.
Is this popular upgrade quietly devaluing your property and jeopardizing financing opportunities? Here’s what you need to know about spray foam insulation’s hidden risks and how they’re reshaping real estate decisions.
The Rise of Spray Foam Insulation
Spray foam insulation has gained popularity due to its ability to fill gaps and create an airtight seal in homes.
Unlike traditional insulation materials like fiberglass or cellulose, spray foam expands upon application, making it ideal for hard-to-reach areas such as attics and crawl spaces. This results in improved energy efficiency, lower utility bills, and better home comfort.
However, despite these advantages, spray foam has certain risks that are becoming more apparent. Improper installation can lead to moisture buildup, structural damage, and health risks due to the chemicals used in the foam.
These issues are inconvenient and can significantly affect a property’s value and marketability.
Why Mortgage Lenders Are Rejecting Homes with Spray Foam Insulation
One of the primary reasons mortgage lenders reject homes with spray foam insulation is the difficulty in assessing the condition of roof timbers. (ref) Spray foam adheres directly to surfaces like roof joists and rafters, making it nearly impossible for surveyors to inspect these critical components for signs of damage or decay.
Without a clear inspection, lenders see these properties as high-risk investments.
Additionally, concerns about long-term durability have surfaced. If spray foam is not installed correctly or degrades over time, it can trap moisture inside walls or roofs, leading to rot and mold growth.
These hidden issues may not be immediately visible but can cause significant damage—something lenders want to avoid at all costs.
The Impact on Homeowners & Buyers
For current homeowners looking to sell their property, having spray foam insulation could complicate the process. (ref) Many buyers rely on mortgages to finance their purchases, but if a lender deems the property too risky due to the presence of spray foam insulation, they may refuse to approve the loan.
This leaves sellers in a difficult position, and they may need to offer alternative solutions, such as removing the insulation or lowering the asking price.
Conversely, buyers who fall in love with a home featuring spray foam insulation may face unexpected hurdles when securing financing.
Even if they are willing to take on the potential risks of this type of insulation, they may struggle to find a lender willing to back their purchase without extensive inspections or costly modifications.
What Homeowners Can Do
If you already have spray foam insulation installed or are considering it for your home, there are steps you can take to mitigate these risks:
- Hire certified professionals: Ensure any installation is done by qualified contractors who follow industry best practices.
- Get regular inspections: Schedule periodic inspections by experts who can assess the insulation and underlying structures.
- Consider alternatives: If you’re planning on selling soon, you might want to explore other insulation options that won’t raise red flags with lenders.
- Communicate with lenders early: If you’re buying or selling a home with spray foam insulation, talk to your lender upfront about any concerns they might have.
By taking these precautions, homeowners can enjoy the benefits of spray foam insulation without jeopardizing their ability to sell or refinance their property later on.
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Davin is a jack-of-all-trades but has professional training and experience in various home and garden subjects. He leans on other experts when needed and edits and fact-checks all articles.