FHA Appraisal Requirements: What To Know

Learn More About FHA Home Loan Appraisals and Their Guidelines

If you’re interested in buying a home with an FHA loan, you’ll need an appraisal from an FHA-certified appraiser. Read on to learn more about what goes into an appraisal, what you can expect in the report, and how much you can expect to pay.

What Is an FHA Appraisal?

An FHA appraisal is a home appraisal required for FHA loans, which are mortgages backed by the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development (HUD). These appraisals estimate a property’s fair market value and ensure it meets the FHA’s standards for livability, safety, and structural soundness.

FHA Home Appraisal vs. Home Inspection

An FHA appraisal determines whether a home meets the FHA’s property standards and is worth the purchase price. A home inspection, on the other hand, provides a more detailed assessment of the home’s overall condition for the buyer’s knowledge.

How Does an FHA Appraisal Work?

In addition to evaluating the home itself, an FHA appraisal also evaluates the home’s market value. This ensures the lender can resell the home without significant loss if the borrower defaults on the loan.

An appraiser will visit the property to prepare the report, including photos and notes on its condition. They’ll also compare recent selling prices of nearby homes with similar size, age, and quality characteristics. A home’s value is determined by a combination of this information and the checklist the appraiser completes regarding property requirements.

The appraisal must demonstrate that the home complies with FHA property acceptability criteria and that any necessary repairs or certifications are completed before closing.

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 lender.

FHA Appraisal Requirements

The bulk of the FHA appraisal process ensures that any property purchased with an FHA-backed loan is safe, sound, and secure. This isn’t just about how the house is at the time of inspection, but also about how well it’s expected to hold up over the life of the mortgage. The appraisal checklist covers the FHA’s minimum property standards, which include:

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.
• Grading: Proper drainage is required so water drains away from the home’s foundation to prevent damage.
• Encroachment: The home, garage, or other structures may not intrude on any adjacent properties.
• Overhead electric power: Power lines should not hang above the home, pool, or water feature.
• Safe property access: Pedestrians and vehicles should have safe access to and from the home.
• Swimming pools: Swimming pools on the property must comply with local law.
• Roof: The roof must be in good condition, with no leaks or loose shingles, and have at least two years of remaining life. Any chimneys should also be in good shape.
• Exterior condition: Any siding, gutters, and downspouts should be intact and functional with no significant damage.
• Fencing: If the property has fencing, it must be in good condition and not leaning or broken.

Interior Conditions and Major Systems

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).
• Appliances: Homes with existing appliances must be operational.
• Walls and floors: There should be no significant cracks, water damage, or other issues compromising structural integrity. In addition, all windows and doors must be intact, functional, and lockable.
• Stairs: All stairs must be stable and have proper handrails.
• Ventilation: There must be adequate ventilation in attics, crawl spaces, bathrooms, and kitchens.

Health, Safety, and Other 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:

• On-site hazards: Issues like asbestos or other pollutants must be resolved prior to the sale of the home.
• 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.
• Termites: The appraiser must confirm that there are no termites or other destructive organisms on the property.
• Lead-based paint: For homes built before 1978, peeling or chipping paint must be corrected to prevent lead hazards.
• Abandoned gas/oil well: A home with an abandoned gas or oil well should have documentation that it was permanently abandoned in a safe manner.

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?

The FHA appraisal cost and timeline can vary depending on the home’s location and size, but it typically ranges from $400 to $700. You can typically roll the cost of your appraisal into your closing costs.

How Long Does an FHA Mortgage Appraisal Take?

The FHA appraisal timeline usually takes about a week, 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.

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 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

An FHA appraisal isn’t just another loan requirement—it’s a safeguard for you and your lender because it confirms you’re investing in a secure, structurally sound home. An added benefit is that if issues arise, the appraisal gives you a chance to address repairs or reconsider your offer before finalizing the purchase.

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.