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Article Update: FHA Loan Appraisal Rules For Central Heating and Air Conditioning Systems

August 24, 2022

FHA Loan Appraisal Rules For Central Heating and Air Conditioning Systems

In 2017, we asked an important appraisal question. We asked, “What are the FHA loan appraisal rules for central heating and air conditioning systems? Does a house need to have central air/heating to be FHA approved?”

There were two answers to this question back then and the same issues apply today.

In HUD 4000.1, we learn the following about the appraisal requirements for heating systems and central air conditioning units, including the following requirement:

“The Appraiser must examine the heating system to determine if it is adequate for healthful and comfortable living conditions, regardless of design, fuel or heat source. FHA loan rules say the Appraiser must notify the Mortgagee of a deficiency if the permanently installed heating system does not:

“Automatically heat the living areas of the house to a minimum of 50 degrees Fahrenheit in all GLAs, as well as in non-GLAs containing building or system components subject to failure or damage due to freezing;”

“Provide healthful and comfortable heat or is not safe to operate;”

“Rely upon a fuel source that is readily obtainable within the subject geographic area;”

“Operate without human intervention for extended periods of time.”

When it comes to central air conditioning, FHA loan rules today state, “Central air conditioning is not required but, if installed, must be operational. If the air conditioning system is not operational, the Appraiser must indicate the level of deferred maintenance, analyze and report the effect on marketability, and include the cost to cure.”

However, this is NOT the final word on the matter. FHA appraisal rules are often supplemented by state/local building codes or other ordinances which must also be satisfied.

FHA appraisal rules do not overrule the local, state or federal requirements in this area, so borrowers should be aware that multiple sets of rules may apply.

As in 2017, our advice remains the same–be sure to check with the local authority to find out what state or local laws may affect the transaction when questions like these arise.

Bruce Reichstein - FHA News Author

By Bruce Reichstein

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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