This is a source of common confusion among buyers and sellers alike. Checklist of FHA appraisal requirements. The appraisers are highly specialized in what they do. For a Federal Housing Administration (FHA) loan to be approved, the home must pass an FHA inspection and appraisal. Here is the general timeline for an FHA home appraisal. Inspect the property’s interior and exterior structure and quality. FHA 203(b) Appraisal Requirements: What You Need to Know. To be sure that a property meets FHA standards, the appraisal process has different requirements than the conventional appraisal process. Or you may have to … In this case, you’ll be paying more for the home than it is worth. All borrowers who use this program have to sign a disclosure that says, "I understand the importance of getting an independent home inspection. In most cases, the only "deal breakers" are serious safety issues that cannot easily be corrected. For example, during an FHA appraisal, utilities must be on. All rights reserved. Previously, Kenny was a Senior Investment Analyst at PFM Asset Management LLC. FHA loans are government-backed mortgage designed to help people with lower incomes or credit scores buy homes. Generally, the infrastructure of a home comprise things such as plumbing and water supply, heating and ventilation, the electrical system and essential tools and equipment, including piping and outlets for natural gas. Once these requirements are met, the FHA loan request can be processed further. FHA inspections ensure to meet the following minimum standards: Safety The appraiser must be … Likewise, these COVID-related modifications do not affect the appraisal requirements for FHA’s Cash- Out refinance program, 203(k) loans, and certain purchase transactions. However, it may be extended for 30 days for eligible borrowers. The photos must show the sides, front and rear of the home, as well as any value-adding improvements such as a pool or patio. I have thought about this before I signed a contract with the seller for a home.". The FHA maintains a list of approved appraisers on the HUD website. NMLS #1136: terms and conditions apply. 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. ), Mechanical systems must be safe, protected from destructive elements, functional, durable and of decent quality, Heating sources must be safe, functional and meet any local requirements, Electricity must be available for lighting and any equipment used, Additional health and safety hazards, including but not limited to, broken windows, blocked doors or steps without a handrail, Adequate space must exist between buildings to allow the maintenance of the exterior walls, If property has multiple units, each living unit must be able to be maintained separately, If property has multiple units, Each living unit must have separate water, sewer, gas, electricity and shut-offs meters, Access to the property must be provided without having to go on to another site. When a Federal Housing Administration home loan is being used, the appraiser basically has to perform double duty. The primary areas of inspection are the roof, the foundation, lot grade, ventilation, mechanical systems, heating, electricity, and crawl spaces (when present). Lead paint abatement is required in these cases as a condition of home loan approval. ), Natural and adequate ventilation of attics and crawl spaces, Property must have sufficient access to the crawl space, Roof must be in good condition and prevent moisture from entering the home. During the appraisal, they will: There is a common misconception that FHA loans require two appraisals. 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. FHA Single Family Housing Policy Handbook IV. 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