FHA Appraisals: What Home Buyers Need to Know

An FHA appraisal will determine the current market value of the home and ensure the property meets FHA's minimum property standards.

If you're applying for an FHA loan, one of the key steps in the process is the FHA appraisal. This is more than just a standard home valuation—it’s a detailed inspection designed to make sure the home meets both value and safety standards set by the Federal Housing Administration (FHA).

In this article, we’ll explain what an FHA appraisal is, what it includes, how it's different from conventional appraisals, and what homebuyers (and sellers) should expect.

What Is an FHA Appraisal?

An FHA appraisal is a required step when financing a home with an FHA loan. It serves two main purposes:

1. To determine the current market value of the home

2. To ensure the property meets the FHA’s minimum property standards

   
   

FHA loans are insured by the federal government, so the U.S. Department of Housing and Urban Development (HUD) wants to make sure the home is safe, sound, and structurally secure before backing the loan.

 

What Happens During an FHA Appraisal?

The FHA appraisal is conducted by a HUD-approved appraiser. This professional will perform a walk-through of the home and evaluate both its market value and condition.

Here’s what they typically assess:

1. Market Value

The appraiser compares the home to similar recently sold homes (called “comps”) in the area to estimate fair market value. The loan amount cannot exceed this value.

2. Health & Safety Requirements

The appraiser will check for issues that could affect health or safety, such as:

• Lead-based paint in homes built before 1978

• Electrical or plumbing problems

• Roof damage or leaks

• Water intrusion or mold

• Heating systems and hot water functionality

  
  

3. Structural Soundness

FHA requires the home to be livable and structurally secure. The appraiser may flag foundation issues, severe cracks, or signs of serious deterioration.

Common FHA Appraisal Requirements

To meet FHA standards, the home must typically meet these minimum guidelines:

• Functioning heating, electrical, and plumbing systems

• No exposed wiring or broken fixtures

• Roof in good condition with at least 2–3 years of life remaining

• No peeling paint (especially in older homes)

• Safe access to the home (stairs, railings, etc.)

• Proper drainage and no standing water

• Adequate water supply and sewage disposal

• No major structural damage

  
  

If the home doesn’t meet these requirements, the seller may need to make repairs before closing, or the buyer may need to negotiate fixes before proceeding.

How Long Does an FHA Appraisal Take?

• Scheduling: 1–3 days after the lender orders it

• On-site visit: Usually 30–60 minutes

• Appraisal report: Typically returned within 3–7 business days

  
  

Once completed, the appraisal report is sent to your lender and reviewed as part of the FHA underwriting process. If the home “passes,” the loan can move toward final approval.

What If the FHA Appraisal Comes in Low?

If the home appraises for less than the purchase price, you have a few options:

• Renegotiate the price with the seller

• Pay the difference out of pocket

• Walk away from the deal if your contract allows

  
  

An appraisal shortfall doesn’t mean the deal is dead—but it will need to be resolved before closing.

Final Thoughts: Be Prepared for the FHA Appraisal

If you’re using an FHA loan to buy a home, the appraisal is a key part of the approval process. It ensures the home is both worth the price you’re paying and safe enough to qualify for government-backed financing.

As mortgage brokers, we help guide our clients through the appraisal process and communicate with real estate agents and sellers to resolve any issues that may arise.

How I Can Help You

When it comes time to purchase a home or refinance an existing loan, I want to help you! Hopefully articles like this give you good information and a better understanding of the mortgage world but let me use my experience and expertise to help you with your particular situation.

I tell my clients and referral partners that a mortgage transaction starts with a simple conversation. Let’s talk about your financial situation, budget, and goals so that I can help you determine the best solution for you. During a 10-minute informal conversation, we can get you on the right path as it relates to a home purchase or mortgage refinance.