So, what does the FHA appraiser look for during this process? An appraisal is an expert assessment of a particular product or asset (in this case a house) to determine its value. adversely affect the physical condition of the property, endanger the health and safety of occupants. If you use an FHA loan to buy a house, the property will have to be appraised and inspected by a HUD-approved home appraiser. The heating system must be sufficient to create "healthful and comfortable living conditions" inside the home. Visually inspect the subject property both inside and out. According to the 2020 FHA appraisal guidelines, all properties being purchased with an FHA-insured mortgage loan must be appraised by a licensed, HUD-approved home appraiser. Appraisers must be qualified to conduct FHA appraisals. Infrastructural requirements: Infrastructural requirements are one of the crucial FHA residential appraisal requirements. HUD actually encourages this. These are the types of issues that send FHA loans off the track. The FHA appraiser needs to verify whether all these aspects are in … HUD's primary concern is the health and safety of the home buyer who will actually live in the house. If your FHA appraiser says repairs are required, you have a few options: Ask the seller to make the required repairs. FHA insured mortgage loans are mortgage loans that are insured by the Federal Housing Administration (FHA). This is the central theme that runs throughout the appraisal guidelines. FHA Single Family Housing Policy Handbook IV. Home buyers and homeowners are often surprised to find that FHA appraisal guidelines include detailed instructions for inspecting the property. But in other instances where significant repairs are necessary, the lender may reject the property. When a Federal Housing Administration home loan is being used, the appraiser basically has to perform double duty. The official FHA appraisal guidelines for 2019 state this clearly: "Required repairs are limited to those repairs necessary to preserve the continued marketability of the property and to protect the health and safety of the occupants.". The condition of the roof is important as it’s a major source of headaches for a homeowner if there is a problem down the line. Whether it is an FHA loan or a conventional loan, though, an appraisal of the property will have to be performed. If the HUD-approved appraiser flags certain issues -- such as peeling paint, loose handrails, or other safety issues -- those issues must be corrected before the loan will be funded. Lead paint abatement is required in these cases as a condition of home loan approval. The basic concept of meeting FHA minimum requirements is that everything must work as it was designed to work. The bottom is that if something poses a threat to the health and safety of the occupant, or to the structure itself, it will probably be marked as "subject to repair." Based on your creditworthiness, you may be matched with up to five different lenders. Take a photo of each comparable sale transaction that is being used to support the appraisal. That is not the case with a regular appraisal used for a conventional home loan. During the inspection, the appraiser will address multiple aspects of the property as required by FHA. You have three options: Kenny is a Banking and Mortgage Research Analyst for ValuePenguin and has worked in the financial industry since 2013. You can find more information about HUD's appraisal guidelines for FHA loans in this particular handbook. An example would be a bedroom with no windows or doors, and therefore no egress in the event of a fire. How long does an FHA appraisal take and how long is it good for? However, keep in mind that an FHA appraisal is for mortgage insurance purposes only and does not guarantee the condition of the home. These items make up the minimum eligibility requirements for an FHA-insured loan. At a minimum, the appraiser must complete the following steps: Visually inspect the subject property both inside and out. All bedrooms should have egress to the exterior, for reasons of fire safety. If your home is appraised for lower than the sales price, then FHA will not insure it. ML 2020-05 also provides information on amending the scope of work when conducting FHA appraisals during the 2020 COVID crisis. Most of the information above was adapted from HUD Handbook 4000.1. If they are corrected before the final inspection (when the appraiser follows up on the hit list), the loan can still move forward. The appraiser does market research and performs the appraisal on-site, The appraiser prepares and submits a report to the lender, The property must be a single real estate entity, The property must be free of hazards and conditions that pose a risk to the health and safety of the occupants or adversely affect the structural soundness and use of the home, The septic system (if present) must be functional, Property must be free of soil contaminants, Site must adequately drain water away from the perimeter of the walls, Must have an acceptable and sufficient water supply, Must have safe and sanitary sewage disposal, Property must have safe and adequate access to cars and pedestrians from a public or private street, Presence of any defective conditions, including but not limited to, poor construction, leaks, decay (A property with any defected conditions is considered unacceptable until the defects are corrected.