What is the difference between an FHA appraisal and a regular appraisal?
You and your loan officer will decide which loan will work best for you. You can choose between an FHA loan or more of a traditional loan. If you go with an FHA loan, you will have to go with an FHA appraisal. Your lender will order the appraisal. The order will be assigned to an appraiser that is approved to complete FHA orders. In order for an appraiser to get approved, they must past a test on how to appraise a home via FHA methods. They must also be a certified appraiser. A certified appraiser offers more experience and education than a regular licensed appraiser. You can check if the appraiser is approved by going to the HUD website or typing in FHA approved appraiser, HUD in your search engine. This will get you to a list of FHA approved appraisers.
Before 2006, FHA appraisals used to offer more details and require additional forms. It was more difficult to close loans via FHA for these reasons. After 2006, the FHA regulations changed and these forms are no longer used. FHA appraisals are not as strict as they used to be. The new regulations softened the restrictions. This will provide less required repairs. I will explain the major differences between a traditional appraisal and an appraisal that will be going FHA.
Basically, the major differences between an FHA appraisal and a regular appraisal is the level of inspection and required repairs by FHA. Let's go through the major differences. FHA will require you to repair of fix the items listed below before funding. A regular appraisal will disclose these items, however, they will not require automatic repair. Here are some requirements that will require your attention, if you go FHA.
Unable to access the exterior of the home via windows or doors: If your home does not offer adequate egress to the outside of the home, your home may not pass FHA inspection. FHA is concerned about your safety. If there is a fire in your home, there must be areas that you can escape the fire. Normally, these will be doors or windows to get to the outside. If the windows are barred and will trap you inside the home, this will be an issue. Remove bars and/or provide a system that will allow the bars to be opened without a special key from the inside of the room. Make sure windows are low enough and big enough to escape in case of fire. Many lenders will require you to provide access to the outside of the home whether you are going with an FHA appraisal or not.
Leaking or worn out roofs: Visually inspect your roof. This is all an FHA approved appraiser will do. If the roof looks good from the exterior and the roof is not leaking or show signs of leaking from the interior of the home, your roof will pass FHA inspection. If the shingles are curling up and look like someone dumped a bag of burnt chips on your roof, you will need to repair or replace your roof. You can not have more than 3 layers of shingles on your roof.
Structural problems: If the FHA approved appraiser gets to your home and notices major structural problems, this may cause your loan to fall through. Let me explain what is a major structural problem. If the appraiser is measuring your home and notices that your home is not square by as much as a foot. Next, your FHA appraiser finds large cracks where they can see light from the inside of the house looking out. The windows and doors don't close properly. These are concerns. If, on the other hand, the FHA approved appraiser finds hair line cracks in the foundation, then this is not considered a major problem.
Peeling paint: In my area, this is one of the biggest issues for FHA loans. Homes built before 1978 must not have peeling paint on the exterior of the home, garage or other structures on the site. Walk around your home and look around the windows seals, eaves and check for all exposed wood or peeling paint. If the paint is peeling, you'll need scrape and paint the exterior of your home.
The FHA approved appraiser will look for other basic safety hazards such as missing stairs, falling hazards, standing water in the crawl space, standing water on the exterior of the home, pools that do have fencing to protect from accidental drownings, etc.
An FHA appraiser will require you to repair or fix the items above. These requirements will need to be corrected before funding will take place. The appraiser will have to go back out to the property to be sure that you've completed the requirements above. This is why it would be best that you check these items before the appraiser gets to your home. A regular appraiser will call these items out on the appraisal, however, some of them will not need to be repaired before funding. The FHA required repairs are similar for all appraisals.
Each bank may have requirements with regards to the appraisal. Ask your loan officer if the lender has any requirements that may stop your loan from funding. Some banks will not loan money on non-conforming properties, manufactured homes, etc.
Tim Page, Certified FHA appraiser, Spokane, WA
To learn more about FHA appraisals,go to http://www.increasehomevalue.org/FHAappraisalguidelines.html