FHA Appraisal Guidelines Versus Conventional Guidelines

This BLOG On FHA Appraisal Guidelines Versus Conventional Guidelines Was UPDATED On October 1st, 2017

Many sellers and realtors prefer selling their homes to buyers who have conventional mortgage loan approvals versus those that are qualified for a FHA insured mortgage loans.

  • In the past, FHA appraisal guidelines were much stricter than conventional loan appraisals.
  • However, nowadays, FHA appraisals and conventional appraisals are similar. 
  • There are more checklists on FHA insured mortgage loan appraisals than there are on conventional appraisals. 
  • The Federal Housing Administration will not insure a residential home that does not meet the basic safety requirement of their FHA appraisal guidelines.

Basic Minimum FHA Appraisal Guidelines

A FHA insured residential home must be habitable and in live in conditions with no building or code violations.

  • The property must have accessibility without encumbrance of an adjoining property via public ways. 
  • In the event if the residential property is not directly accessible by public ways, there needs to be an easement with the property providing direct access.

Pedestrian Access

All FHA insured residential homes must have access for a pedestrian or a motorized vehicle from any public or private street with a surface.

  • In the event if the property is owned privately, the property must be maintained by a homeowners association or by an agreement with other private homeowners.

Free Of Health And Safety Hazards

FHA also requires that the subject property need to be clear of any health and safety hazards such as mold, pollution, radioactive items, lead, asbestos, peeling paint, and other hazards.

  • Hazards also include faulty wiring, electrical, plumbing, and heating and air conditioning systems that is visibly noticeable to the FHA appraisal during inspection.   
  • In the event if the FHA appraiser finds such hazards on subject property, the violation in question needs to be corrected and a re-inspection needs to be scheduled.

Separation Of Adjoining Buildings

FHA appraisal guidelines also mandates that the subject property’s structures be separated from the adjoining buildings via a wall that is of full height.

  • In the event if the wall is an outer most exterior wall, FHA appraisal guidelines mandates that there should be ample space in between the buildings.
  • The reason is so that it has enough clearance to be able to perform wall maintenance if required to do so.

Proper Drainage

FHA appraisal guidelines also requires that the subject property is graded so that in the event of major rainstorms.

  • The water will drain away from the perimeter walls of the property.
  • The water does not create a puddle where it can seep into the foundation.

Proper Workmanship And No Foundation Damage

FHA appraisal guidelines also require that the subject property be clear of defective workmanship.

  • No foundation damage as well as structural damage caused by termites, water, or deferred maintenance.
  • FHA appraisal guidelines mandates that the roof have at least a 3 year life span left.
  • The roof cannot have no missing shingles or tiles or have any sign of leakage.

Separate Living Quarters And Full Kitchen

FHA appraisal guidelines also require that the subject property have ample living space.

  • Property requires separate living quarters, a full kitchen. and family entertainment area.
  • The home needs to have properly working bathrooms with all electrical, plumbing, and HVAC in good operating order.

Proper Sanitary Facilities And HVAC

FHA appraisal guidelines also require that the subject property have the following:

  • Sanitary facilities which include functional sewage systems
  • Proper heating and ventilation
  • Temper controlled heating system
  • Hot water
  • Properly working electrical and plumbing and safe drinking water. 

All water, electric, gas, and sewer systems must be independent for the subject property with not depending on another property.

Free Of Moisture And Mold

FHA appraisal guidelines require that all basements, attics, and crawl spaces must be free of moisture and dampness and have proper natural ventilation.

  • This is in order to minimize heat and moisture that will eventually be the cause of decay, deterioration, and structural damage. 
  • All crawl spaces need to be easily accessible and clear of debris.

These are just a few of FHA appraisal guidelines and in a way, it is a good thing.

  • Conventional appraisal guidelines are similar to FHA appraisal guidelines. 
  • There is no mortgage lender that will approve a mortgage loan in the event if the appraisal report comes back with defective items on the property.

Transferring From One FHA Lender To Another FHA Lender

FHA Appraisals can transfer from one lender to another lender.

  • In general, a home buyer cannot change a conventional loan appraisal to a FHA appraisal but if a conventional loan goes from a Conventional to FHA, it can easily be converted.
  • FHA appraisals transfer when a FHA Borrower transfers lenders from one lender to another FHA Lender with the transfer of the FHA Case Number transfer.
Gustan Cho NMLS ID # 873293

Related> FHA Appraisal Basics

Related> Can I Transfer A FHA Appraisal Transfer From One Lender To Another

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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