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The appraisal is a process that the lender initiates. The lender pays an FHA fee appraiser to review the home to determine the fair market value taking into consideration the condition of the home itself and how it matches up other, similar properties in the housing market.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

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FHA Home Loan Appraisal Questions and Their Answers

FHA Home Loan Appraisal Questions and Their Answers
June 29, 2019 - The appraisal is a process that the lender initiates. The lender pays an FHA fee appraiser to review the home to determine the fair market value taking into consideration the condition of the home itself and how it matches up other, similar properties in the housing market.

The appraisal is intended to be a tool for the lender to do this, and part of the work means ensuring that the home meets the minimum FHA requirements listed in HUD regulations. 
But the appraisal is not an up-close, detailed look at the home to find all defects-borrowers who expect this out of an appraisal, sometimes mistakenly referred to as an inspection, will be very disappointed.

The appraisal is a tool for the lender. A home inspection is a different thing altogether and must be arranged by and paid for on the borrower’s side of the transaction. If you did not personally arrange for an inspection, you did not get one.

What Does the Appraiser Look For?

The appraiser will walk through the home and observe its’ condition. The appraiser will NOT step onto the roof to inspect it, and the appraiser is not required to force her way into crowded attic spaces or other areas. 

All areas must be accessible to the appraiser but the work involved here does not include running tests or doing home inspection-type detailed work. The appraiser looks for evidence of mold, peeling paint, damage, cracked foundations, pooling water, leaks, and other problems. But these must be observed by the appraiser via a walk-through.

Why Did the Appraiser “Flag” a Certain Issue?

FHA appraisers don’t just use the FHA appraisal guidelines to determine what may need corrections or repairs as a condition of loan approval; they are also required to make sure the home is in compliance with local code as viewed in the appraisal walk-through. 

In other words, FHA loan rules are not the only ones that apply-your local building code requirements are also applicable.

The appraiser will in many cases require corrections or repairs of such issues as they are discovered; these corrections are required as a condition of loan approval. Some issues cannot be corrected, and in those cases the home would not be approved for an FHA mortgage.

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