Appraisals for FHA Loans

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FHA loans are among the most flexible and consumer-friendly on the market. There are no income restrictions or credit requirements to obtain one of these government-insured loans, which remain popular among first-time home buyers and those with less-than-perfect credit. FHA loans come with a host of benefits, from low down payments to provisions for condominiums.

But they can also come with a handful of headaches.

Increasingly, prospective home buyers in cities with older housing stocks are running into some major problems with appraisals. Lenders in California and elsewhere are seeing FHA loans get bounced because of the agency’s appraisers, who evaluate structures using a laundry list of specific criteria.

Home buyers should have a thorough understanding of the FHA’s appraisal standards before plunging into the process. For the FHA, the appraisal process goes well beyond dollars and cents. The agency takes health and safety into account when scrutinizing a structure. Among the FHA’s criteria:

Windows and doors must have appropriate weather protection

Insulation must be intact for all ceilings and outward-facing walls, along with all HVAC ducts and pipes

Crawl spaces and attics must have proper ventilation

A smoke detector must be present in every bedroom

Interior and exterior cracks must be sealed

The agency’s appraisers also look for safety concerns like broken windows and handrails and signs of insect or rodent infestation. Houses that may contain lead paint are also a target, as are homes with evidence of asbestos or toxic mold. Appraiser will also require that the home’s utilities are on during the examination.

The FHA appraisal process extends beyond the standard evaluation. Given that, prospective homeowners should keep these criteria close to the chest when shopping for a new home. To view the appraisal guidelines in their entirety, visit the HUD website.

This guest post was written by Brandon Laughridge of Mortgage Loan Place. MLP specializes in educating consumers about FHA Mortgages and VA Home Loans.