November 30, 2022
When you plan to buy a home with an FHA loan you should be thinking about how much you will need to save for expenses paid upfront, such as appraisals and inspections.
You may not, as a first-time home buyer, have the experience to anticipate all expenses you need to pay in the coming months. But there are typical costs you can plan and save for.
Home Inspection Costs
Did you know there’s no fixed price for home inspections? There are no national cost guidelines or restrictions for this service; home inspection costs will vary based on the housing market and inspections are paid for by the borrower independently of the rest of the home loan process.
Home inspections may cost somewhere between $300 and $500 depending on location. Your inspector reports to you, not to your loan officer.
Under FHA loan rules home inspections are not mandatory–you do not need one to get your mortgage loan approved. However, you should consider an inspection necessary if you want to make a fully informed decision on using a major line of credit to buy property.
Home Appraisal Costs
How much do appraisals cost? The appraisal process is mandatory for FHA mortgages, and borrowers quickly learn there are no national guidelines for appraisal costs. They may run between $300 and $500 for one depending on location.
While the appraisal is mandatory, the appraisal is NOT the same as an inspection. Do not trust the results of the appraisal in the same way you would a home inspection, the procedures may be quite different.
A Word On Compliance Inspections
The compliance inspection is not necessary for all transactions–it IS required if your home is appraised and the FHA appraiser requires corrections. You or the owner have the corrections made, then a compliance inspection is used to ensure the corrections are acceptable.
Yet again, there’s no national price standard for these costs. For compliance inspections, the price tag may vary depending on variables like whether the home is new construction or existing construction.
Ask your lender what is typical in such cases so you can budget for the amount of a typical compliance inspection and set aside a bit extra in case the service has a higher price tag.