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A borrower new to the FHA home loan process may wonder how long the appraisal is valid. This is a fair question since a first-time home buyer may have heard warnings about delays in certain portions of the home loan process.

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FHA Loan Articles

News and Updates for Homeowners

How Long Are FHA Appraisals Valid?

How Long Are FHA Appraisals Valid?
June 9, 2019 - A borrower new to the FHA home loan process may wonder how long the appraisal is valid. This is a fair question since a first-time home buyer may have heard warnings about delays in certain portions of the home loan process. One such delay revolves around the closing date for the transaction, while other delays may occur for a variety of reasons at certain stages of the loan including the approval stage.

If the lender has to take additional time to verify information that was discovered on the credit check but left off the initial application documents, for example, a delay could result. But no matter where the delays occur for a given FHA loan transaction, those who are not sure how that could affect their loan should have a conversation with the lender.

Time factors for FHA home loans can be very important-and that includes the FHA appraisal process. It’s is one of the most important parts of the home loan approval cycle; the credit check, appraisal, and home inspection are all equally crucial for the borrower.

FHA home loan rules that govern how long an FHA appraisal may remain valid for can be found in HUD 4000.1, which starts off discussing appraisal validity with mention of a 120 day validity period. That period is not necessarily set in stone, as HUD 4000.1 explains:

“The 120 Day validity period for an appraisal (see Ordering Appraisals) may be extended for 30 Days at the option of the Mortgagee if (1) the Mortgagee approved the Borrower or HUD issued the Firm Commitment before the expiration of the original appraisal; or (2) the Borrower signed a valid sales contract prior to the expiration date of the appraisal.”

FHA home loan rules in this section also discuss appraisal updates.

“An appraisal update must be performed before the initial appraisal, with no extension, has expired. Where the initial appraisal is subsequently updated, the updated appraisal is valid for a period of 240 Days after the effective date of the initial appraisal report that is being updated.”

Borrowers should know that when the appraisal comes in, the lender cannot request a new appraisal just because there is a disagreement over the dollar amount of the appraised value of the property. If there are what HUD 4000.1 describes as “material deficiencies”, there may be an avenue of recourse; the same may be true if there is new information provided that could change the outcome of the appraisal.

But requesting a new appraisal just because the original came in lower than expected is not permitted; supporting evidence in the form of written documentation would need to accompany any request for an appraisal review. 

Remember, if the appraised value of the home is lower than the asking price, the borrower is free to walk away from the transaction without penalty as the FHA, the lender, or the seller cannot compel the borrower to agree to pay the difference between the appraised value and the asking price out of pocket (which is what would be required in such circumstances).

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