April 18, 2021

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FHA Appraisals: Are They As Strict As Conventional Loan Appraisals? A Reader Question

A reader asks,

“Are FHA appraisals generally more “strict” than traditional mortgage appraisals? I am questioning what types of repairs are generally required in advance of closing?”

“Specifically, I am selling my owner-occupied home to buyers that are anticipating an FHA loan, but they have expressed concern about the appraisal process.”

“There are cosmetic concerns at the house (rooms need paint, screen door should be replaced, missing shutter), but the well, septic, roof and furnace are all relatively new. Can you please clarify?”

This question is difficult to answer for one simple reason–FHA appraisals require the home to live up to both FHA minimum property standards (MPRs) AND state/local building code. If FHA minimum standards are met, but local code compliance is not evident, FHA MPRs do NOT trump the local code.

In other words, a home can meet FHA minimum standards and still be out of compliance with a local ordinance. FHA rules supplement the local code, not replace it.

Borrowers who have concerns about the condition of a home should not rely on the appraisal as a stamp of approval. A home inspection is not a mandatory part of the FHA loan process, but borrowers should pretend like it is.

If you are selling a home and are concerned about whether it will pass the appraisal process, it’s a good idea to confer with an experienced home inspector or real estate agent about local issues that could affect the sale of your home.

Yes, it does cost money to hire a home inspector to help with these issues–but for those who have made selling the home a priority, it may be a wise investment to make.

Do you have questions about the FHA home loan process? Ask us in the comments section.

Joe Wallace - Staff Writer

By Joe Wallace

November 14, 2012

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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