October 3, 2017
How long are FHA appraisals valid? That can be an important question, especially in situations where there might be a delay in the processing or closing of a home loan for some reason. FHA loan rules governing the appraisal process are found in HUD 4000.1, the FHA loan handbook.
In that handbook, there is a general rule for the age of documents used to process the mortgage. According to that section on page 107, we learn:
“Documents used in the origination and underwriting of a Mortgage may not be more than 120 Days old at the Disbursement Date. Documents whose validity for underwriting purposes is not affected by the passage of time, such as divorce decrees or tax returns, may be more than 120 Days old at the Disbursement Date.”
This section adds, “For purposes of counting Days for periods provided in this SF Handbook, Day one is the Day after the effective or issue date of the document, whichever is later.”
FHA appraisal age rule state that in general, an appraisal is valid for 120 days. This time period may be extended by a month “at the option of the Mortgagee if:
(1) the Mortgagee approved the Borrower or HUD issued the Firm Commitment before the expiration of the original appraisal; or
(2) the Borrower signed a valid sales contract prior to the expiration date of the appraisal.”
If there is an update to the appraisal, FHA loan rules state that the update must happen before the original appraisal expires. When this happens, “the updated appraisal is valid for a period of 240 Days after the effective date of the initial appraisal report that is being updated”, which is a doubling of the original validity period.
FHA loan rules also add that a participating FHA lender is required to order a new appraisal “for each case number assignment and may not reuse an appraisal that was performed under another case number, even if the prior appraisal is not yet more than 120 Days old”. That information is found on page 124 of HUD 4000.1.
How appraisals are carried out, the certification of FHA appraisers, and other issues may be affected by state law. The FHA minimum standards in HUD 4000.1 will not override such laws and the results of any FHA appraisal must be acceptable to both the FHA as well as comply with state/local laws, ordinances, and building codes.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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