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FHA Loans and Home Inspections

September 12, 2022


We get many questions about the FHA appraisal process. One variation on a common theme? The questions we get involving readers who opted not to get a home inspection, relied on the FHA appraisal process alone in determining whether the house was defect-free or not, and had complaints about the home later on.

This is a situation common enough that it makes sense to emphasize the importance of NOT relying on the FHA appraisal process as a means to detect flaws or defects with a home that could be purchased with an FHA mortgage.

Why is relying on the appraisal alone a bad idea?

For starters, the FHA and HUD official site makes it very clear that the FHA appraisal is NOT an inspection. “Passing” the FHA appraisal process only means that the home meets MINIMUM standards.

FHA appraisers are not required to go onto the roof, enter crawlspaces, or have extensive knowledge of a home’s various systems such as central air, drainage, etc. The appraiser is expected to know what conditions meet FHA minimum standards and state/local building code.

The FHA appraisal is not a stamp of approval on a home, nor is it a guarantee of any kind. Borrowers who do not elect to get a home inspection and rely on the appraisal alone won’t get any help or funds from the FHA should the home have problems later on.

A home inspection is carried out by an independent, trained professional who will examine the various systems of the home, the roof, the crawlspace, etc., and look over these areas and more to see what issues may be present.

An appraisal may not detect foundation issues, plumbing problems, etc. It may also not be able to determine the remaining useful life of a variety of systems in the home. A home inspection, on the other hand, may be able to tell the borrower a great deal about these issues and much more.

Yes, a home inspection is an expense the borrower must pay. But it’s a case of paying hundreds upfront to save thousands or even tens of thousands of dollars later.

A home loan is a major investment, and borrowers should expect to budget for the expense of a home inspection right along with the other costs of this important economic decision.

Anything less than a home INSPECTION, as opposed to the APPRAISAL, means the borrower is not making a fully informed decision about purchasing a particular property. For your protection, get a home inspection.

Joe Wallace - Staff Writer

By Joe Wallace

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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