FHA Appraisal Guidelines: What to Expect

If you are looking to get an FHA loan, you will have to get an FHA appraisal to determine the property’s value, and to make sure the home is safe and up to the FHA’s standards for potential homeowners.

Loans backed by the Federal Housing Administration, FHA loans, could be a great choice for homebuyers with lower credit scores or who are looking for a smaller down payment options.

FHA loans do have loan limits, which vary depending on the area and number of units on a property. Overall, FHA loans tend to have more flexible qualifications but do require an FHA appraisal.

Start your mortgage application to talk with a professional Loan Officer who can help answer any questions you may have for an FHA loan.

Lenders will request an FHA appraisal after an offer is accepted. The appraisal is done by a third party to ensure it is unbiased.

An appraiser will walk through the inside and around the outside of the home examining the structure, condition and major appliances or systems. Afterward, an appraiser will look at other homes in the area to see what similar properties are selling for.

The buyer often pays for an FHA appraisal. The price is usually included in closing costs, though it will need to be paid when an appraisal is requested. The exact cost of an FHA appraisal is determined by the size, location and condition of a home.

Here are a few things you can expect an appraiser to look at during an FHA appraisal.

• Foundation and basement
• Doors and windows
• Locks
• Appliances and HVAC system
• Roof and gutters
• Walls and ceilings
• Insulations and attic
• Floors
• Plumbing and electrical systems

An FHA appraisal is different from a conventional home appraisal that you may get when looking to buy, sell or refinance a home.

A conventional home appraisal is completed by a licensed home appraiser to estimate a value for the property. These professionals will look at the exterior and interior of a home as well as comparable property values in the area to come up with their estimated home value.

An FHA appraisal will determine the value of a home but also ensure that the property meets the FHA’s minimum property standards for health and safety, structural security and home security.

Minimum property standards examined during an FHA appraisal are set by the U.S. Department of Housing and Urban Development (HUD). Here are some of the minimum property standards.

• Health and safety: This is to ensure the property does not have issues that could endanger the new homeowner, such as mold, hazardous materials or toxic substances.

• Structural security: The property must not have any major problems that would affect the structural integrity of the home.
• Home security: Checking for home security ensures all windows, doors and locks are in proper working order.

Depending on how your FHA appraisal comes back, there are a few things that happen or that you can do.

If your FHA appraisal comes back low before you purchase the home, your options are to pay the difference, renegotiate the purchase price or to walk away.

With a low appraisal, your lender won’t give you more money than the home is worth to buy the property. If you still want the home, you can go back to the seller with your appraisal and try to renegotiate for a new sale price.

If your appraisal is significantly lower than the listing price or the seller won’t budge on price, your best option might be to walk away.

If your FHA appraisal comes back higher than your agreed-upon purchase price, you are in the best possible situation. This means that you are most likely getting a great deal on the home, and you should continue with the planned transaction.

To find out how to move forward after an FHA appraisal, fill out an online application to connect with a lender and talk about your exact situation.

_{Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.}

_{Rate is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the Nevada Department of Veterans Services, the US Department of Agriculture, or any other government agency. No compensation can be received for advising or assisting another person with a matter relating to veterans’ benefits except as authorized under Title 38 of the United States Code.}

_{Information provided is for educational purposes only. It should not be construed as financial or legal advice or instruction. Rate does not guarantee or assume liability for the accuracy, completeness or timelines of the information. You should conduct additional research before making any mortgage related decisions.}