Are FHA appraisals more strict?

The FHA Appraisal

To secure a mortgage, the property must meet FHA minimum standards and meet a fair market value. As such, FHA appraisals are usually more strict than conventional appraisals. To qualify for an FHA loan, the appraisal must show: The roof is in good repair with no work needed for two years.

Similarly one may ask, are FHA appraisals strict?

There's a common misconception that FHA appraisals are unnecessarily strict, and that any inspection "hits" will end your chances of getting a loan. This is incorrect. In fact, the health-and-safety aspects of the FHA appraisal have gotten a bit more relaxed over the years.

Furthermore, are FHA appraisals a problem? Some of the more common issues that pop up from an FHA appraisal are peeling paint and unsafe access points to areas of a home. There cannot be any peeling paint on the exterior of your home. This will get flagged by the appraiser.

Correspondingly, do FHA appraisals come in lower?

Sometimes FHA appraisers make mistakes. They're not infallible. If the comps support the seller's asking price, but the FHA appraisal still comes in low, then the home appraisal might be inaccurate. If the comps support the appraiser's lower estimate, then the seller might be asking too much.

How long does it take for FHA appraisal to come back?

In most cases, the appraisal can be completed within a matter of days. But this will depend on the appraiser's workload, efficiency, and other factors. The property visit itself usually only takes a few hours. But the appraiser has some other research to do as well, such as reviewing comparable sales.

39 Related Question Answers Found

What disqualifies a house from FHA?

For a Federal Housing Administration (FHA) loan to be approved, the home must pass an FHA inspection and appraisal. That means it must be worth the purchase price and have such basics as electricity, drinkable water, adequate heat, a stable roof, fire exits and more.

Why do sellers not like FHA loans?

Reasons Sellers Don't Like FHA Loans

Both reasons have to do with the strict guidelines imposed because FHA loans are government-insured loans. For one, if the home is appraised for less than the agreed-upon price, the seller must reduce the selling price to match the appraised price, or the deal will fall through.

Can an appraiser require repairs?

Appraisers will flag any major issues regarding plumbing, electrical, and HVAC (heating, ventilation, and air conditioning). All systems should be in working condition, or you'll likely need to repair them before a bank will secure the buyer's loan.

Can buyer be present at appraisal?

Yes, the appraiser will actually visit the house during the home appraisal process. There is no specific rule that says buyers cannot attend, but the process is typically handled by the appraiser alone. You would have to contact him to see if you can be present when he visits the house.

Are VA appraisals tougher?

Unfortunately, VA appraisals aren't the same as they are if you're purchasing a home with a conventional loan. The VA is backing the home, so they want it to be in good condition before they approve any type of loan. This makes most VA appraisals tougher to pass, and it can slow down the process of buying a home.

Why do FHA loans fall through?

The reasons FHA loans fall through are the same any other loan fails. They include: Not enough funds for the down payment or closing costs. Lower credit score than when you completed the application.

Why do loans fall through?

Too Much Debt

In short, if your debts are using up too much of your monthly income already, you might have trouble getting approved for a loan. Excessive debt is another reason why FHA loans sometimes fall through.

How long does it take for an appraisal to come back?

A: A good appraiser will have the report back to the client within 24 to 48 hours after the time of inspection. Occasionally it might take a little longer due to the limited amount of sales data such as when a property is in an area where few properties sell, or the property is unusual.

What hurts a home appraisal?

Comparable homes or comps are one of the most important factors affecting appraisal value. An appraiser will take a close look at recently sold, nearby homes with similar bedrooms, bathrooms, updates and square footage to your home. The value of these homes can provide baselines for appraisal value.

What happens when house doesn't appraise for sale price?

If your home doesn't appraise for the selling price, you and the buyer will both have to make some decisions. Those decisions could result in the deal moving forward, or falling off the tracks. The buyer could pay the difference out of pocket, which doesn't happen very often.

Does a messy house affect an appraisal?

Impact of Clutter

Unless the amount of clutter begins to affect the structural condition of a home, it will not affect an appraisal. The cleanliness of a home also has no impact on the value. It is not uncommon for an appraiser to walk into a cluttered, messy home.

How accurate are home appraisals?

An appraisal is not the definitive market value of a home. The fair market value of a property is the price that a willing and knowledgeable buyer would pay to a willing and knowledgeable seller, when both parties are acting voluntarily and in their best interests. Appraisals can be very accurate or downright faulty.

Do appraisals usually come in at asking price?

Seems like every time there is a purchase transaction needing an appraisal, you come in just above the purchase price. If the house is selling for $200,000, you come in at $202,000. If it is selling for $450,000, you come in at $460,000.

How do comps affect appraisals?

When valuing a home, an appraiser collects data on the sale prices of similar homes to help develop a credible opinion of value. Generally speaking, comps that have sold most recently and are most similar in location and physical characteristics to the subject property are selected for further analysis.

Who pays for FHA appraisal?

Here's the short answer: While most of the costs relating to an FHA loan can be negotiated, it is usually the buyer who pays for the home appraisal. After all, it is the buyer's mortgage loan. And the appraisal is required as part of the FHA mortgage loan package. So the home buyer usually pays for it.

Are appraisals public record?

Appraisals are not public record. Lenders do not share appraisals with other lenders. We can order our own appraisals at any time with our appraisers, no matter what appraisal problems may have surfaced with another lender. Once uploaded, an FHA appraisal runs with the property for six months no matter what.

Why are appraisals so expensive?

An appraisal fee covers the cost of having a professional appraiser evaluate a home and estimate the market value of the home. The cost is often around $300 to $500, but prices depend on the specific property. Unique properties, large houses, and remote locations typically cost more to appraise.