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FHA appraisal requirements

Learn more about FHA loan appraisals and their guidelines

If you’re interested in buying a home with an FHA loan, you’ll want an appraisal from an FHA-certified appraiser. Read on to learn more about what goes into an appraisal, what you can expect in the report, and how much you can expect to pay.

Why is an FHA home appraisal necessary?

In order to qualify for an FHA loan, the home must pass an inspection that proves it’s safe for the buyer to live in and is a worthy risk for the lender. The appraisal must demonstrate that the home complies with FHA property acceptability criteria and that any necessary repairs or certifications are complete prior to the sale of the home.

What are the minimum FHA property requirements?

The bulk of the FHA appraisal process ensures that any property backed by an FHA loan is safe, sound, and secure. The appraisal checklist covers the FHA’s minimum property standards. These requirements include:

  • Encroachment. The home, garage, or other structures may not intrude on any adjacent properties.
  • Overhead electric power. Power lines should not hang above the home, pool, or water feature.
  • Safe property access. Pedestrians and vehicles should have safe access to and from the home.
  • Onsite hazards. Issues like asbestos, lead, or other pollutants must be resolved prior to the sale of the home.
  • Abandoned gas/oil well. A home with an abandoned gas or oil well should have documentation that it was permanently abandoned in a safe manner.
  • Living unit checklist. The home must have safe water, at least one bathroom with a toilet and shower, a safe method for sewage disposal, adequate space for living and cooking, and adequate heat and hot water. Homes with existing appliances must be operational.
  • Swimming pools. Swimming pools on the property must comply with local law.
  • Structural conditions. The foundation must be in sound condition for the life of the mortgage and free of substantial damage.
  • Termites. The appraiser must confirm there are no termites or other destructive organisms on the property.

How does an FHA appraisal determine a home's value?

An FHA appraisal will also evaluate the home’s market value to ensure the lender is able to resell the home in case the borrower defaults on the loan. This evaluation is considered for the economic life of the home. The economic life is determined by the following criteria:

  • The area the home is located in must be able to support housing for lower income families.
  • Any negative aspects of the area do not endanger the health and safety of those who live in the home.
  • The home can be resold to a similar area buyer.
  • The life of the home is perceived to be longer (or equal) to the mortgage term.
  • The mortgage for the home is deemed as an acceptable risk.

How much does an FHA appraisal cost?

The FHA appraisal cost and timeline can vary depending on the location of the home and its size, but averages between $300 and $500. You can typically roll the cost of your appraisal into your closing costs.

Last reviewed and updated May 2023 by Freedom Mortgage Corporation.

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