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A common problem with FHA appraisals has nothing to do with the outcome of the appraisal per se, but rather the borrower's interpretation of what passing an FHA appraisal actually means.

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FHA Loan Articles

News and Updates for Homeowners

FHA Appraisals: Not a Guarantee for a Perfect Home

November 1, 2014 - A common problem with FHA appraisals has nothing to do with the outcome of the appraisal per se, but rather the borrower’s interpretation of what “passing” an FHA appraisal actually means. For example, if a borrower has the home appraised and few corrections or repairs are needed, does this mean the home is free of defects?

Here’s an example of a common question along these lines:

“I purchased a home with FHA approved loan. The FHA appraisal did not mention that the roof is in bad condition. After moving into the home my  roof is leaking.”

The FHA and HUD address this problem in a document all FHA loan applicants should read. It is titled, “For Your Protection, Get A Home Inspection“ and says specifically:

“An appraisal is different from a home inspection. Appraisals are for lenders; home inspections are for buyers. An appraisal is required to:
  • Estimate the market value of a house.
  • Make sure that the house meets FHA minimum property standards/requirements.
  • Make sure that the property is marketable.”
It is crucial for all borrowers to pay for this optional, but very important home inspection. In the FHA/HUD document it says clearly:

“FHA Does Not Guarantee the Value or Condition of your Potential New Home. If you find problems with your new home after closing, FHA can not give or lend you money for repairs,  and FHA can not buy the home back from you. That is why it is so important for you, the buyer, to get an independent home inspection. Ask a qualified home inspector to inspect your potential new home and give you the information you need to make a wise decision.”

The only help you may have if you ignore the advice to get a home inspection and later find defects in the property is to pursue legal options, but there is no guarantee of success.

The best way to be protected as a buyer is to make sure you have paid for a home inspection--never rely on the appraisal alone. The FHA does NOT “approve” or “guarantee” a home with the appraisal process. The only thing the appraisal does in this context is to declare the home meets MINIMUM FHA loan guidelines.