subject: Basic FHA Appraisal Guidelines [print this page] Some loan officers do not like FHA loans because of the FHA appraisal guidelines. Many feel they are too hard to meet. But that is not true. These guidelines are to make sure the home is safe and sound. Basically they are ensuring there are not any safety hazards and soundness as far as the structure is concerned.
Here are a few basic things they will look at:
crawl space
attic space
condition of the roof and their materials
electrical and heating
hot water heater
does the home have lead-based paint
size of the bedroom windows
evidence of environmental problems like asbestos and mold
Remember these are just a few of the things the appraiser will look at and the appraiser must be FHA certified.
The following list are items you can be sure the appraiser will request repairs on:
Exterior bedroom windows do not have adequate access or egress in case of an emergency escape
Roofs that are leaking or have 3 or more layers of shingles
Structural problems such as the foundation sinking or other damage to the foundation
In a home built before 1978, chipping or peeling paint surfaces
Exterior of a home built after 1978, chipping paint or finish that is exposed
Broken windows and doors
Drainage problems like damaged gutters or anything else that leaves standing water around the house
Inoperable wells that have not been properly capped by a licensed contractor
Evidence of pests that can damage the home like termites
As you can see from the above list, it all pertains to safety and soundness of the home. This ensures that the lender is loaning money on a secure and safe home. They do not want to get the home back because of some major deficiency. Now this does not mean there will not be other things that the appraiser will notice and ask to be fixed. Keep in mind these guidelines are updated periodically and can be area specific. So do not be surprised if the appraiser asks for other repairs. The appraiser is to determine the value of the home so it can qualify for FHA mortgage insurance. They typically use homes within a 1 mile radius that have been sold. They choose home that are comparable to the home they are appraising. This value is used to figure the maximum FHA insurable mortgage loan. This does not warranty the property for you. You have to have your own home inspection to decide if the home is worth it to you.
Why does FHA loans have you jump all these hoops?
FHA is not the lender. They just insure the mortgages from their approved lenders. Since they are the ones insuring the mortgage, they want to be sure the home is structurally sound and safe. Consider, the lender is assured of obtaining their money back in case of a default with this insurance. Thus the qualifications are a little more difficult than a conventional mortgage. They have a lower down payment and the source of that down payment is more flexible. Yes, FHA appraisal guidelines may look at more things than a conventional appraisal. But do not let that deter you. FHA loans is one of the best for first time home buyers. So go ahead and get the process started and soon you will be decorating that beautiful home.
