FHA home appraisals and inspections are the source of some confusion among home buyers. That’s because the process is slightly different than it is with a “regular” conventional mortgage loan.
This article explains the FHA home appraisal and inspection process in Washington State, and what makes it unique. It will also clear up some common points of confusion.
FHA Home Appraisals in Washington State
If you use an FHA-insured home loan to buy a house in Washington State, the property you are purchasing will have to be appraised and inspected by a HUD-approved home appraiser.
The appraiser’s mission is twofold:
- He or she will determine the current market value of the property being purchased.
- The appraiser will also inspect the home to make sure it meets Department of Housing and Urban Development (HUD) minimum property standards.
Those are the two primary objectives for an FHA home appraisal in Washington State. Now let’s look at what makes the process unique from conventional mortgage loans.
There’s a “Built-In” Home Inspection
Home buyers are sometimes surprised to learn that the FHA-approved home appraiser also inspects the condition of the property. This makes it different from a standard home appraisal, where the appraiser mainly wants to know the property’s value.
Here’s the main difference between regular and FHA appraisals in Washington State:
- Conventional: When a conventional (or non-government-insured) mortgage loan is being used, the home appraiser is chiefly focused on determining the current market value of the property being purchased. He’s only concerned with the condition of the property as it relates to the value. A property inspection is optional.
- FHA: When an FHA loan is being used to buy a home in Washington State, the appraiser has two objectives. HUD requires him to determine the property’s market value, as with any appraisal. But they also require a thorough home inspection to ensure the property meets the minimum prescribed standards for occupant health and safety. This is what makes the Washington State FHA appraisal process unique from a conventional loan.
Primary Focus: Health and Safety of the Homeowner
So, what does an FHA home appraiser actually look at during his or her appraisal and inspection? He’s primarily concerned with the condition of the house as it relates to the health and safety of the home buyer.
Section II-D of HUD ‘s Single-Family Housing Policy Handbook states the following:
“The Appraiser must limit required repairs to those repairs necessary to: maintain the safety, security and soundness of the Property; preserve the continued marketability of the Property; and protect the health and safety of the occupants.”
In fact, the words “health and safety” appear numerous times throughout this section of the HUD handbook. That is the primary focus of the inspection portion of the FHA home appraisal.
Additionally, the handbook states that repairs are generally not required if they “do not affect the health and safety of the occupants or the security and soundness of the Property.” There’s that health-and-safety phrase again.
Listing all of the property requirements and standards for a Washington State FHA appraisal is beyond the scope of this article. There are pages and pages of them, and they are very detailed in nature. If you’d like to learn more about minimum property requirements for FHA loans in Washington State, refer to section II-D of the Single-Family Housing Policy Handbook (also known as HUD Handbook 4000.1).