An FHA appraisal serves two purposes: determining the fair market value of the property and verifying that it meets HUD's Minimum Property Requirements (MPR). This differs from a standard home inspection, which is a more detailed examination of the home's systems and components. The FHA appraisal is required by the lender, while a home inspection is optional (though strongly recommended for buyers).
HUD's Minimum Property Requirements, outlined in Handbook 4000.1, focus on three categories: safety, security, and structural soundness. The FHA appraiser will evaluate:
Sellers can proactively address the most common issues that cause FHA appraisals to flag problems:
If the FHA appraiser identifies issues, the seller typically has the option to make the required repairs before closing. The appraiser may require a re-inspection after repairs are completed, which involves an additional fee (usually $100-$200). If the seller refuses to make repairs, the buyer may need to walk away or negotiate a different solution. Note that FHA appraisals are attached to the property for 180 days, meaning if one buyer's deal falls through, the next FHA buyer will receive the same appraisal.
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