May 28, 2020

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FHA Mortgage Appraisal Requirements: A Reader Question

110We get many questions about the FHA loan appraisal process in our comments section. Here’s one of the latest:

“What does whenever feasible mean? My lender is telling me I need a quote on connecting to the public sewerage system and that this should be more than 4% of the purchase price to be considered not feasible. Where are they getting this information?”

This question is in reference to an older blog post we made in 2014 discussing FHA/HUD appraisal standards for septic systems. Here is the specific part of the post the reader is referencing:

“In general, the FHA minimum property requirements for sewer systems, as listed in HUD Handbook 4940.3 states:

‘Whenever feasible, connection shall be made to a publicly owned or publicly controlled system that is adequate to serve the needs of the project.’ The handbook adds, ‘When a publicly owned or publicly controlled system is not available or connection to or service therefrom is not feasible, connection shall be made to a community system which complies with HUD Handbook 4940.3 Rev.1-1992 and is acceptable to local regulatory bodies. Evidence of approval by such authorities for each completed system shall be submitted to the HUD Field Office.'”

To answer the reader’s question directly, “whenever feasible” may be determined by a variety of factors including lender standards. If state or local ordinance has a say in the matter, those considerations would also have to be made. A borrower who isn’t sure what is considered feasible will have to have a conversation with the lender to see what standards may apply.

Questions like these are a good reminder that FHA loan rules including appraisal standards are not the only ones in play when it comes to getting a mortgage loan. State law, local ordinance, changes to those laws, and federal guidelines are all possible variables that can affect a mortgage loan transaction.

FHA and HUD loan rules don’t anticipate or catalog all aspects of a state or local ordinance (that would be an impossible task) so when it comes to local jurisdictions and lender standards, the FHA and HUD often simply defer to those authorities and/or standards.

There are some FHA rules and regulations that are specifically designed to address important issues. But many more issues may already be addressed at the state or local level and don’t need an additional layer of complexity. Borrowers may need to seek information from a local authority in such cases to see what applies.

Do you work in residential real estate? You should know about the free tool offered by It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:

Joe Wallace - Staff Writer

By Joe Wallace

May 17, 2016

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 for (8) years and is currently the Associate Editor for

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About 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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