FHA Appraisal Requirements: What Homebuyers Need to Know

How Does an FHA Appraisal Work?

In addition to evaluating the home itself, an FHA appraisal also evaluates the home’s market value to help the lender confirm the home is worth the value of the mortgage.

The FHA appraisal process typically follows these steps:

1. The lender orders the appraisal.
2. An FHA-approved appraiser visits the property to evaluate the home’s condition and reviews nearby real estate comps to determine the home’s fair market value.
3. The appraiser prepares a report on the home’s condition and submits it to the lender.
4. Any required repairs are addressed before closing, if necessary.

The appraisal must demonstrate that the home complies with the FHA’s property acceptability criteria.

Why Is an FHA Home Appraisal Necessary?

FHA home appraisals are necessary to protect both the buyer and the lender by verifying that the property is livable, free from major hazards, and a worthy investment for the buyer.

FHA Appraisal Checklist: Minimum Property Requirements

The primary purpose of an FHA appraisal is to verify that the property purchased with an FHA loan meets FHA Minimum Property Requirements (MPRs). These standards are designed to ensure the home is safe, secure, and structurally sound for occupancy. 

Structural and Exterior Condition

These FHA checklist standards focus on the structural integrity of the property:

• Foundation: The foundation must be in sound condition and free of substantial damage, including cracks and shifting, for the life of the mortgage. Crawl spaces or basements need to be accessible and free of pests or water damage.
• Roof: The roof must be in good condition, with no leaks or loose shingles, and have at least two years of remaining life. Chimneys should also be in good shape.
• Windows and doors: All of the home’s windows and doors must open and close properly, and exterior doors must be able to be securely locked.

Additionally, FHA appraisers will look at encroachment, pools, property access, fencing, and other factors that can affect the home’s structural and exterior condition.

Major Systems and Utilities

To qualify for an FHA mortgage, systems, structure, and other conditions inside the home will be evaluated for functionality and livability:

• Heating and cooling: The home must have a working heating system capable of maintaining a safe temperature. If there’s an air conditioning unit, it’ll be checked as well.
• Electrical system: Wiring must be safe, properly installed, and in compliance with local code (no exposed wires or missing covers).
• Plumbing and water: The home must have safe running water (hot and cold), at least one bathroom with a toilet and shower, a safe method for sewage disposal, and adequate space for living and cooking.

Walls, floors, and stairs must also be in good condition, and there must be adequate ventilation.

Health and Safety Hazards

FHA appraisers also evaluate the property for health, safety, and environmental hazards that could put occupants at risk or affect the home’s livability:

• Safe property access: Pedestrians and vehicles should have safe access to and from the home.
• On-site hazards: Issues such as sinkholes, nearby abandoned oil wells, and asbestos or other pollutants must be resolved before the home is sold.
• Lead-based paint: For homes built before 1978, peeling or chipping paint must be corrected to prevent lead hazards.

There may be additional areas that need to be evaluated, but licensed appraisers will know what to look for during the process.

FHA Mortgage Appraisal Requirements FAQs

Knowing what FHA appraisals involve is important, but you might have more questions about other parts of the process. We’ve got answers.

How Much Does an FHA Appraisal Cost?

FHA appraisal fees vary widely by market and property type but usually range from $400 to $700. You can typically roll the cost of your appraisal into your closing costs. The timing of the appraisal varies by lender. 

How Long Does an FHA Mortgage Appraisal Take?

The FHA appraisal timeline usually takes a week or two, including a few days to schedule the appraisal, a few days for the FHA-approved appraiser to complete it, and a few more days for your lender to review it.  If the appraiser identifies required repairs, additional time and a re-inspection may be needed before closing.

Do FHA Loans Require a Home Inspection?

No. FHA loans require an appraisal, not a home inspection. However, many buyers choose to get a home inspection because it can uncover issues that may not be identified during the appraisal process.

What Happens After an FHA Appraisal?

Once the appraisal is complete, your lender will review the report to confirm the home’s value and compliance with FHA property standards. If the property meets requirements, the loan moves forward. If the appraisal notes any issues or required repairs, they must be corrected and re-inspected before the loan can be approved.

Final Thoughts: How FHA Appraisals Protect You

FHA appraisals and home inspections are often confused, but they serve different purposes. An FHA appraisal helps verify the home's value and compliance with FHA property standards, while a home inspection provides a more detailed evaluation of the home's condition. Understanding both can help you make a more informed homebuying decision and avoid surprises before closing.

Beyond satisfying a loan requirement, an FHA appraisal helps protect both you and your lender by identifying safety, livability, and structural issues that may need to be addressed before the sale can proceed. 

Now that you understand what’s required, get prequalified today to see your personalized rate and how much home you could qualify for with an FHA loan.