FHA Appraisal and Inspection Requirements: Clearing Up Misinformation
We often receive this question from clients applying for an FHA home loan. Unfortunately, there is a lot of misinformation online regarding FHA appraisal and inspection requirements. This has led to frustration and confusion among buyers and sellers. In this article, we aim to provide the correct information and clarify the FHA’s stance on these requirements.
FHA Does Not Require a Home Inspection
The Department of Housing and Urban Development (HUD) administers the FHA loan program and establishes all the rules and guidelines for this program. While HUD does not require borrowers to have the property inspected, they strongly encourage it. In fact, HUD requires all FHA borrowers to sign the HUD-92564-CN form when applying for an FHA loan. By signing this form, borrowers acknowledge the importance of obtaining an independent home inspection and accepting the potential consequences of not getting one.
For Your Protection: Get a Home Inspection
Why a Buyer Needs a Home Inspection
A home inspection provides the buyer with more detailed information about the overall condition of the home prior to purchase. During a home inspection, a qualified inspector takes an in-depth, unbiased look at your potential new home to:
- Evaluate the physical condition: structure, construction, and mechanical systems.
- Identify items that need to be repaired or replaced.
- Estimate the remaining useful life of the major systems, equipment, structure, and finishes.
Appraisals are Different from Home Inspections
An appraisal is different from a home inspection. Appraisals are for lenders, while home inspections are for buyers. An appraisal is required to:
- Estimate the market value of a house.
- Ensure that the house meets FHA minimum property standards/requirements.
- Make sure that the property is marketable.
FHA Does Not Guarantee the Value or Condition of Your Potential New Home
If you find problems with your new home after closing, FHA cannot provide or lend you money for repairs, nor can FHA buy the home back from you. That is why it is crucial for you, as the buyer, to get an independent home inspection. Ask a qualified home inspector to inspect your potential new home and provide you with the information you need to make a wise decision.
Radon Gas Testing
The United States Environmental Protection Agency and the Surgeon General of the United States have recommended that all houses should be tested for radon. For more information on radon testing, call the toll-free National Radon Information Line at 1-800-SOS-Radon or 1-800-767-7236. If you decide to test for radon, you may do so before signing your contract or after signing the contract, as long as your contract states that the sale of the home depends on your satisfaction with the results of the radon test.
Be an Informed Buyer
It is your responsibility to be an informed buyer. Ensure that what you buy is satisfactory in every respect. You have the right to carefully examine your potential new home with a qualified home inspector. You may arrange to do so before signing your contract or after signing the contract, as long as your contract states that the sale of the home depends on the inspection.
By understanding the FHA’s stance on home inspections and appraisals, you can make informed decisions during the home buying process.