When reviewing your closing checklist or simply trying to plan for all the expenses of your FHA home loan, the appraisal and the optional (but vital) home inspection are two of the expenses you’ll need to save for. The appraisal is required as a condition of loan approval, the inspection is optional but borrowers cannot make a truly informed decision about a home without the inspection.
When it comes to FHA appraisal requirements, the rules are designed only to insure the property meets MINIMUM FHA standards. The appraisal is never to be taken as a message from the FHA that the home is free of defects or problems-only an home inspection can tell you what the true condition of the property might be.
FHA minimum standards for appraisals include requirements for basements and crawlspaces. These requirements are found in HUD 4000.1, starting on page 490. When it comes to the basement, this portion of the FHA mortgage loan rules state, “The Appraiser must notify the Mortgagee of the deficiency…if the basement is not free of dampness, wetness, or obvious structural problems that might affect the health and safety of occupants or the soundness of the Structure.”
Basement requirements in this section also include some instructions to the appraiser about sump pumps. “The Appraiser must notify the Mortgagee of the deficiency…if the sump pump is not properly functioning at the time of appraisal. A sump pump may be hard-wired by an acceptable wiring method or may have a factory electrical cord that is to be connected to a receptacle suitable for such use.”
Crawl spaces have more detailed instructions to the appraiser:
“The Appraiser must visually observe all areas of the crawl space and notify the Mortgagee of the deficiency of MPR and MPS when the crawl space does not satisfy any of the following criteria:
-The floor joists must be sufficiently above ground level to provide access for maintaining and repairing ductwork and plumbing.
-If the crawl space contains any system components, the minimum required vertical clearance is 18 inches between grade and the bottom of the floor joists.
-The crawl space must be properly vented unless the area is mechanically conditioned.
-The crawl space must be free of trash, debris, and vermin.
-The crawl space must not be excessively damp and must not have any water pooling.If moisture problems are evident, a vapor barrier and/or prevention of water infiltration must be required.”
This section ends by stating that the FHA appraiser must “report any evidence that may indicate issues with structural support, dampness, damage, or vermin” that has the potential to affect the safety, security or soundness of the home.