When applying for an FHA loan, your future home must pass an FHA appraisal—a specialized inspection that goes beyond just determining market value. Unlike a conventional appraisal focused primarily on property worth, an FHA appraisal includes a detailed review of the property’s safety, security, and structural integrity according to HUD’s Minimum Property Requirements (MPRs).
Key Differences Between FHA and Conventional Appraisals
A conventional appraisal mainly asks, “What is the value of this home?” to protect lenders from loaning above the home’s worth. FHA appraisals do that and also verify the home is safe to live in and structurally sound, ensuring protection for both the borrower and the FHA insurance program.
| Feature | Conventional Appraisal | FHA Appraisal |
|---|---|---|
| Primary Focus | Market Value | Market Value and Property Condition |
| Main Goal | Protect the lender | Protect lender, FHA, and borrower |
| Standards Followed | USPAP (Uniform Standards of Professional Appraisal Practice) | USPAP plus HUD’s MPRs |
| Outcome | Establish property value | Establish value and identify necessary repairs |
The “Three S’s” in FHA Appraisals
FHA appraisers assess the home based on:
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Safety: Checks for hazards like lead-based paint (especially in homes built before 1978), exposed wiring, faulty electrical, unsafe stairs without handrails, and health risks like mold or contaminated water.
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Security: Ensures the home is weatherproof and secure, including intact roofs with at least two years of expected life, functional windows, and doors that lock properly.
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Soundness: Evaluates structural integrity, looking for foundation cracks, water damage, wood-destroying insects (e.g., termites), and the working condition of major systems such as plumbing, heating, and electrical.
Dealing with FHA Appraisal Issues
If the appraisal reveals problems, repairs will be required before loan approval. These conditions are outlined as “subject to” repairs in the appraisal report. Repairs can be addressed by the seller, negotiated into the sale price, or occasionally by the buyer. FHA appraisers commonly conduct a follow-up inspection after repairs are completed.
Common Questions
Who pays for the FHA appraisal?
Buyers typically pay for the appraisal, and it’s part of closing costs.
How long does an FHA appraisal last?
An FHA appraisal is valid for 120 days from the inspection date.
Can I use a conventional appraisal for an FHA loan?
No. The appraisal must be done by an FHA-approved appraiser following HUD’s guidelines.
FHA appraisal requirements are detailed in the HUD Handbook 4000.1, the Single Family Housing Policy Handbook, which is the definitive guide for FHA property standards (HUD Handbook 4000.1).
For a deeper understanding of home appraisals, see our glossary entry on home appraisal and learn how it fits into the mortgage process.
External Resource
For authoritative details directly from the source, visit the official FHA appraisal information page on HUD.gov.
This comprehensive overview will help you know what to expect during the FHA appraisal, helping ensure your home purchase goes smoothly.
