FHA USDA Guideline Review
1. How do you fail an FHA USDA appraisal?
The overall structure of the property must be in good enough condition to keep its occupants safe (a. HVAC or permanent heat to maintain 50 degrees Fahrenheit, b. water, c. Hot Water Heater, d.) waste water, e.) functioning appliances). This means severe structural damage, leakage, dampness, decay or termite damage can cause the property to fail inspection. In such a case, repairs must be made in order for the FHA loan to move forward. We follow the guidelines stated in the FHA / HUD Handbook 4000.1 https://www.hud.gov/program_offices/housing/sfh/handbook_4000-1
a.) HVAC: Appraisal Rules An FHA appraiser is likely to require corrections if a “permanently installed” HVAC system does not do the following: -Automatically heat the living areas of the house to a minimum of 50 degrees Fahrenheit. -Provide healthful and comfortable heat. -Rely upon a fuel source that is readily obtainable.
b.) Water: FHA appraisal rules for plumbing systems HUD 4000.1 states: “The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if the plumbing system does not function to supply water pressure, flow and waste removal.” To review the plumbing system, the appraiser is required to flush the toilets and operate faucets to check water pressure and flow. The FHA appraiser is instructed “to determine that the plumbing system is intact, that it does not emit foul odors, that faucets function appropriately, that both cold and hot water run, and that there is no readily observable evidence of leaks or structural damage under fixtures.”
c.) Hot Water Heater: The FHA appraisal / loan requires the water heater to include a temperature and pressure-relief valve “with piping to safely divert escaping steam or hot water.”
d.) Septic Sewer and FHA: Appraiser must look for signs of failure or malfunction (does not emit foul odors). Where such issues are present, the appraiser will require a correction and possibly a re-inspection. Some of the rules covering septic systems will be established by the local authority, so do not assume FHA loan rules have the final say on what is acceptable and what is not. You’ll need to talk with your loan officer to learn what is typical in that housing market.
e.) FHA / HUD Handbook 4000.1 provides the following definition for appliances: “Appliances refer to refrigerators, ranges/ovens, dishwashers, disposals, microwaves, and washers/dryers.” Further, the handbook also states that any appliances, from those listed above, “Are to remain and that contribute to the market value opinion must be operational.”
2. How do you pass an FHA appraisal?
Homes must meet the following appraisal requirements, or be repaired to meet requirements, to be approved for an FHA loan: -Must have an undamaged exterior (no flaking paint, rotten wood, broken windows), solid foundation (no major cracks in the walls) and roof (no water stains in the ceiling / attic and no visible roof damage).
-Must have safe and reasonable property access (bedroom windows /doors must open, security bars must have quick release access latches).
-Must not contain loose wiring and exposed electrical systems.
3. Are FHA USDA appraisals usually high or low?
Both FHA and Conventional appraisals use the current market value of a property to estimate its worth. FHA loans require a significantly lower down payment than conventional loans, so the FHA appraisal is performed at a higher level than conventional.
4. What do appraisers look at the most?
A home appraiser's job is to assess the condition of your home and to provide an expert opinion on its estimated market value. They examine factors such as a home's condition, comparable recent sales, and any upgraded amenities and features that could impact the property's value (updated windows, updated hvac, views, built-in cabinet storage, high ceilings, clerestory windows, bay windows, hardwood / tile flooring, built out versus drop in kitchens, his/her bath vanities / closets, separate shower, soaker baths etc).
5. What are things FHA inspectors look for?
Summary: Structural issues (foundation cracks), hazards (toxic smells), and makes sure the home is in good livable condition (functional mechanical systems) while meeting the FHA minimum property standards (no dangerous conditions or major deficiencies). The FHA inspection also verifies the true market value of the home.
If you're refinancing, please ask your lender to add us to their approved appraisal roster. If you're buying or selling, or adding-on, and want to know your property value, please send us a request https://www.austinappraisalfactory.com/order-form