FHA Appraisal Criteria

FHA Appraisal Criteria

Whenever the Federal Housing Administration believes insuring a home, that home has to undergo a rigorous appraisal process. Part of the process is all about determining the house’s appropriate value. But an FHA appraiser must also have an eye for safety, as FHA will not offer mortgage insurance when the residence is considered unsafe. So an appraiser should consider several factors and adhere to significant guidelines while conducting the appraisal.

The Home Site

The appraiser must analyze the home site in order to come up with a right value of the home and to be sure the home is suitable for its intended use. In other words, a single-family home should be a single-family residence and not a multi-family home. To reach these decisions, appraisers should look at several factors on the property, according to HUD. These factors include the land and its topography, condition of the land, improvements round the property, easements and encroachments. HUD’s property guidelines for appraisers states that encroachments can lead to the house’s ineligibility for FHA-backed lending.

Inside and Outside the Home

Appraisers will appear inside and outside your home to judge worth. In cases like this, the principles are more cosmetic. The appraiser must determine the house’s gross living room. Basement living spaces and bedrooms can only be included if there’s proper ventilation. The appraiser can subtract or add value for the property’s appearance and if its layout fits into the area. To ascertain conformity to its neighborhood, the appraiser can use factors such as if the home is suitable for its intended use, what HUD calls for the house’s”stability of design” and the ratio of the expense of the house’s upkeep as related to income.

Life of the Home

The appraiser should determine two entities –the house’s remaining economic life and remaining physical life. Physical life is described as how much longer the residence is livable. Economic life is described as how long the home can deliver a return on its worth. Economic life cannot be longer than bodily life. An appraiser measures economic life several manners. The appraiser uses the region’s financial background, gauges the house’s proximity to obsolescence, tendencies in place land values, quality of home building and possible home upkeep.


An FHA evaluation places an emphasis on safety, and when any area of the residence is considered dangerous for the resident, the appraiser cannot pass the home for underwriting. The appraiser must order repairs and then re-inspect the property if any safety issues are located. The appraiser can order the replacement of such items as septic systems if they are not functioning correctly. Other areas that can force the appraiser to red flag a home comprise health dangers, soil contamination and dangerous water wells. Lead-based paint isn’t allowed in any FHA-insured residence and upon detection the appraiser will order all lead-based paint eliminated.

Home Defects

FHA considers home defects along the same lines as safety, however, the guidelines have to do with the structural integrity of the home. Defects like poor construction, persistent dampness inside the home, leaks, decay and insects like termites are considered defects. Also included in the region of home defects are venting, the home’s foundation and roofing. If the appraiser finds problems in these areas, he is required to report them order repairs before approving the appraisal.

Mechanical Devices

Another guideline for FHA appraisers is checking all mechanical or electrical devices in the home. This can include the air conditioner, the header, the breaker box, electrical lines and other such devices. To pass FHA evaluation, all such devices must work safely and properly, cannot be found in a location where its performance can be compromised by the elements and have to have an adequate remaining working lifetime.

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