FHA Appraisal Guidelines

FHA appraisal guidelines are in place to safeguard the homebuyer as well as to protect FHA's ability to provide a loan guarantee. The home must meet these guidelines in order to qualify for FHA insurance, or an FHA loan. If you are buying a home, understanding these guidelines can ensure you do not pay for an appraisal on a home that will not qualify for an FHA loan.

Learn about FHA loan guidelines.

In a traditional or conventional home loan, the appraisal determines the value of the home. This information comes from a variety of factors including the features of the home and the area's market price. In an FHA loan, specific guidelines are in place to ensure the home is not only valuable but also safe and secure for the buyer.

The health and safety of the home is important to FHA. Consider the following appraisal requirements for FHA appraisers:

• The appraiser must do a complete interior and exterior visual inspection of the home.
• The appraiser must take photographs of the home, including those that show the sides, front and the rear of the house. All improvements on the home must also be in a photograph. In addition, the appraiser must take photos of the home from the street, called the street frontage shot.
• If there is new construction occurring, the appraiser needs to provide proposed roadway construction to ensure it meets requirements.
• Provide a local street map leading to the property and another outlining each of the other comparable properties in the area.

These are just the very basics of the information to gather for the appraisal. Once the appraiser arrives on property, he or she must look at specific aspects of the property to ensure it is safe to occupy according to FHA guidelines.

The following are some of the FHA guidelines required. The appraiser will come to the property, determine if the property meets these standards and then develop a property value for the home.

• Topography and Soil: The site needs to meet grading requirements to prevent wet basements and overflowing sewage disposal systems. The soil needs to be permeable with proper drainage.
• Living Area: The living area must be finished, above grade living and habitable.
• Basement: The FHA does not consider basement bedrooms or basement apartments as habitable space (and therefore it does not add to the property value as such.) To be included in the gross living area, it must have proper light and ventilation. It must have a windowsill no more than 44 inches from the floor that has a net clear opening of 24 inches by 36 inches.
• Surrounding Area: The home must meet the same level as the surrounding neighborhood. This ensures the home is marketable.
• Hazards: In particular, the home must be free from any hazards. This includes any hazards that may affect the health or safety of those living in the home. The home must be structurally sound and free from any impairment of use in a customary fashion. The property should not have any toxic chemicals, radioactive materials, pollutions or any drainage or erosion problems. The property must be free from termites, or any other infestation.

In addition to these things, the FHA appraisal guidelines also stipulate the home must be free from defects including the following:

• No defective construction.
• No evidence of poor workmanship.
• No evidence of continuing settlement.
• No evidence of decay.
• No leakage evident.
• No basement or other dampness.
• No conditions that would prohibit sanitation or structural soundness.
• No evidence of foundation problems.
• No lead paint or chipping/peeling paint.
• No stairways without railings.
• No evidence that mechanical systems in the home do not work properly.
• No broken windows, doors or faulty steps.
• Doors may not have any blockage.

These guidelines help to ensure that the property is safe for the homeowner to live in.

If you wish to purchase a home that needs repairs to any of these areas, the home seller (or in some cases the buyer) will need to complete the repairs prior to FHA insuring the home. The U.S. Department of Housing and Urban Development provides additional information at their website.

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