Understanding the FHA Appraisal Process

What inspections are required for an FHA loan?

FHA home inspection graphicAs of 2019, the inspection requirements for a FHA loan are as follows: an appraiser must inspect the home both inside and out; they must also take a close look at the home's HVAC system, electrical system, plumbing, and any other major systems or appliances. In addition to this, the appraiser must also fill out a checklist which includes things such as assessing the property's condition, safety and security features.

While all of these requirements may seem like a lot, they are actually in place to protect both the buyer and lender. By making sure that the home is up to standard, it minimizes the risk of defaulting on the loan. Additionally, it ensures that the home is safe and habitable for those who will be living there.

FHA Mortgage Appraisal

The FHA appraisal is meant to ensure that the home you're buying is worth the price you're paying and meets FHA's minimum standards. The FHA appraiser will look at things like the condition of the property, its size and features, and compare it to similar homes in the area. If the appraiser finds that the home is worth less than what you're paying, the mortgage may not be approved.

While all FHA loans require an appraisal, not all appraisals are created equal. There are two different types of appraisals that can be used for an FHA loan: a desktop appraisal and a full field appraisal.

A desktop appraisal is done entirely online and doesn't require the appraiser to visit the property in person. This type of appraisal is typically used for properties that are in good condition and haven't been significantly renovated or updated.

A full field appraisal is a more in-depth inspection of the property. The appraiser will visit the property in person and conduct a physical inspection of the home to determine its condition. This appraisal is typically used for properties that have been significantly renovated or updated or are in worse condition than what's stated in the listing.

The buyer normally pays for the lender-ordered house appraisal. The typical FHA appraisal costs between $300 and $500, but may cost more based on the size of the property.

Appraisers study the selling prices for similar properties by evaluating homes that have sold within the last six months in the same area. They estimate the market value of the home based on their findings during the site inspection.

The appraiser will use a checklist to evaluate the home. The appraisal may take a few days before the comprehensive FHA inspection checklist is delivered to the lender.

The FHA appraisal will point out any repairs to meet FHA minimum property standards. When this happens, the loan is conditionally approved, and the appraiser writes down what the market value will be after the repairs. In the meantime, you have to work with the seller to make sure the repairs are done before closing. If the repairs have to be done after closing, you may have to put money in an escrow account.

An appraisal is valid for 120 days, but may be extended under specific situations; for instance, if the borrower signed a sales contract before the appraisal's expiry date, the appraisal can be extended for 30 days.

FHA Loan Appraisal Required Repairs

Home inspector with home buyerIf you're planning to buy a home with an FHA loan, you'll need to get the home appraised by an FHA-approved appraiser. An appraisal is an independent assessment of the value of a home. The appraiser will look at the property itself, as well as any recent comparable sales in the area, to determine the value of the home.

The appraiser will also look for any required repairs that need to be made before the mortgage can be approved. These required repairs are called "health and safety" items, and they're meant to protect both the borrower and the lender from substandard housing conditions. Some common examples of health and safety items that might be included on an FHA appraisal report include:

  • Exposed electrical wiring Inadequate heating or cooling systems
  • Leaking or broken plumbing fixtures
  • Missing or damaged handrails or stairways
  • Unsafe or hazardous conditions on the property

What Does an FHA Inspection Look for?

When you buy a house with an FHA loan, the appraiser will do a complete inspection of the property in order to make sure the home meets the FHA appraisal guidelines. Here's what they'll be looking for:

  1. The property must be in good condition and free of any health and safety hazards.
  2. The home must have adequate heating, cooling, and plumbing systems.
  3. The electrical system must be safe and up to code.
  4. The roof must be in good condition with no leaks or major damage.
  5. The foundation must be stable and free of any cracks or other damage.
  6. The home must have proper drainage to protect against flooding or water damage.
  7. The home must have working smoke detectors and carbon monoxide detectors.
  8. The property must meet all local building codes and zoning regulations.

Are Home Inspections Required for FHA Loans?

It's a common question among home buyers: Do I need a home inspection if I'm getting an FHA mortgage?

FHA mortgages do not require a home inspection. However, most home buyers obtain a home inspection. This inspection is typically done by a professional inspector, and it will assess the condition of the home as well as any potential safety hazards. The inspector will also look for any necessary repairs that need to be made in order to bring the home up to FHA standards. If the inspection reveals any serious concerns, the loan may be denied unless the defect(s) are remediated.

If you're purchasing a home that is being sold as-is, an inspection is highly recommended. An as-is sale means the seller will not be making any repairs to the property before closing. This could be due to the condition of the home or because the seller simply doesn't want to make any repairs. In either case, it's important to know what you're getting yourself into before buying an as-is property.

If the home you're purchasing is in need of major repairs, an inspection may be required by your lender. This is because the cost of repairs can impact the value of the home and your ability to repay the loan. If the repairs are too expensive or extensive, your loan may be denied.

An inspection may also be required if there are health or safety concerns with the property. For example, if there is evidence of mold or lead paint, an inspection will likely be needed to determine the extent of the problem and what needs to be done to remediate it.

Does FHA Require a Termite Inspection?

No, FHA mortgages do not require a termite inspection. However, the property being purchased with an FHA loan must be in good repair. If there is evidence of termite damage, the lender will require that it be repaired and treated prior to closing on the mortgage. Termite inspections are typically performed by a licensed pest control company and cost between $75 and $200.

Does FHA Require a Septic Inspection?

If you're considering an FHA mortgage to finance your new home purchase, you may be wondering if a septic inspection is required. The short answer is that it depends on the property. If the property has a private septic system, then an inspection will likely be required by the lender. If the property is served by a public sewer system, then an inspection may not be necessary.

The FHA mortgage program has specific requirements for homes that are served by private septic systems. These requirements are in place to protect borrowers from assuming responsibility for a faulty or inadequate septic system.

If you're purchasing a home that is served by a public sewer system, an inspection of the septic system may not be required. However, the lender may still require an inspection to ensure that the system is adequate and in good working condition. The cost of this inspection would be borne by the borrower.

Whether or not a septic inspection is required, all borrowers should be aware of the potential risks associated with private septic systems. Borrowers should make sure that they understand the condition of the

Do FHA Loans Require Radon Testing?

Radon gas graphicIf you're considering an FHA mortgage to purchase a home, you might be wondering if you're required to have a radon test. The answer is no, you are not required to test for radon. However, it's a good idea to test for radon before you close on your home, since high levels of radon can be harmful to your health.

If you're not sure whether or not to test for radon, here are a few things to keep in mind. First, radon is a colorless, odorless, and tasteless gas that can be found in both indoor and outdoor air. Second, radon is the leading cause of lung cancer among non-smokers in the United States. And third, radon testing is relatively inexpensive and easy to do.

So, while you're not required to test for radon before closing on your home, it's definitely something to consider. For more information on radon testing, please contact your real estate agent or the FHA.

Does FHA Loans Require Lead Paint Inspection?

Whether you are contemplating an FHA loan to finance the purchase of a property, you may be wondering if a lead paint check is necessary. The answer is "no."

The good news is that most homes built after 1978 won't have any lead-based paint, so any inspection is usually a formality. However, if your home was built before 1978, the inspector will take samples of paint from various areas of the home and have them tested for lead content.

If lead is detected, the lender may require you to take steps to remediate the issue before approving the loan. These steps could include removing and/or encapsulating lead-based paint, or making other repairs to ensure the safety of occupants.

If you're concerned about whether your home will pass inspection, your best bet is to consult with a qualified inspector who can assess the property and give you an idea of what to expect.

Does an FHA Loan Require a Well Inspection?

If you are looking to purchase a home, you may be wondering if an FHA requires a well inspection. The answer is no, but this doesn't mean that you can take on a mortgage without doing your research. Before applying for an FHA loan, make sure to ask the lender if a well inspection is required. If it is, be prepared to pay for the inspection yourself.

The FHA stipulates that wells must be at least 10 feet from the property line, 50 feet from the home's septic tank, and 100 feet from the septic tank's drain field. Additionally, chlorination may be necessary as part of the appraiser's evaluation.

What Type of Inspections Are Required for an FHA Loan

Many home buyers and homeowners mistakenly believe that the FHA will inspect the home prior to settlement. The Department of Housing and Urban Development, which oversees the FHA loan program, does not mandate home inspections for applicants. However, they do encourage home buyers to obtain a home inspection.

The Federal Housing Administration (FHA) requires an appraisal on the subject property. The main objective of the FHA home appraisal is to evaluate the home's current market value. The appraiser will do this by analyzing recent and similar sales in the neighborhood. The majority of mortgage loans need an appraisal, and the FHA lending program is no exception.

The appraiser is not a home inspector, however, appraisers are trained to recognize problems that can affect the health and safety of the home buyer. If the appraiser observes a specific problem, the appraiser will request an inspection by an expert.

The FHA does not require a radon test, well and septic test, or even a pest inspection. However, the lender is allowed by the FHA to supersede the FHA minimum guidelines. The most common exception is a pest inspection. Some

When Does FHA Inspection Take Place?

If you choose to obtain a home inspection or some other inspection, the inspection(s) usually takes place after the sales contract is signed and the home buyer makes loan application. If a defect is discovered, the home buyer and seller have time to resolve the problem prior to settlement.

Keep in mind that the appraisal and any other inspection is typically paid by the home buyer. The cost to thoroughly evaluate the condition of the home can be expensive.

Conclusion

In conclusion, the FHA loan inspection requirements are not as stringent as one might think. As long as the home is in good repair and the appraiser finds no major problems, the loan should be approved. So if you are thinking of buying a home, don't let the fear of a home inspection hold you back.

SOURCE: Repair requirements

Recommended Reading

  1. FHA Loan: How do FHA loans work?
  2. FHA Interest Rates Today: Compare the FHA Loan Rates
  3. FAQs about FHA loans: What you need to know