December 12, 2016
FHA appraisal topics have been very popular recently in our comments section. One reader asks, “I’m going to view a home that has a plywood floor in the basement. not sure if that will be acceptable by FHA guidelines. Is there somewhere I can access a list of what is unacceptable?”
FHA appraisal requirements for forward and “reverse” mortgages (HECM loans) are found in HUD 4000.1, starting on Page 465. This handbook can be downloaded from the FHA official site at www.fha.gov. A quick scan of HUD 4000.1 doesn’t reveal a specific requirement for the nature or construction of wood flooring in basement areas, but that leads us to a very important point where issues like these are concerned.
FHA appraisal rules are NOT the only guidelines that must be met; state and local building code is also a very important factor. FHA appraisal rules don’t cover each and every contingency that an appraiser might encounter on the job, and since state/local code handles many of these areas sufficiently, the FHA loan rulebook doesn’t seek to “reinvent the wheel” so to speak.
The FHA doesn’t keep copies of state and local building code on file, nor could the FHA speak as an agency to specifics of a local code requirement. Suffice it to say that FHA appraisal rules do not replace building code, instead the FHA defers to local jurisdiction in such cases.
Appraisal rules cover the minimum standards required for a home, but meeting these rules doesn’t guarantee that the home is free of problems, shortcomings, etc. The borrower is expected to understand this and consider a home inspection for a much closer look at the condition of the home. Your FHA appraisal fees do not pay for an in-depth INSPECTION of the home, simply an appraisal of it to make sure it meets the minimum requirement.
So where this reader question goes, to be a well-informed house hunter, some understanding of state/local code will be required in areas that may concern the borrower. It’s also a good idea to speak to an experienced real estate agent, home inspector, or loan officer who knows what’s acceptable in the local area based on prior experience. That can be a big help going forward with your FHA loan and house hunting.
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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