The Federal Housing Authority underwrites and helps to finance mortgage loans for homes nationwide and is run by by the U.S. Department of Housing and Urban Development. To successfully get such a mortgage, the home you're looking to buy must pass an FHA appraisal. This appraisal will determine the amount of mortgage you can get, plus make sure the home is safe and sound for you to live in.
Value Estimate Requirements
The FHA appraiser will come up with an estimate of value. The appraiser will find about three to five similar homes that have sold in the same area as the home you're looking to buy. These other homes will have been sold within the last year. Using these sales figures and making necessary adjustments, the appraiser will determine the appraised value of the home you want to buy. This figure or the actual sales price, whichever is less, will be the basis of how much your mortgage can be.
The FHA also wants to make sure the home is safe and sound, for your sake as well as for the lender's. The appraiser must personally inspect and approve the physical condition of the home. This includes checking the floor, ceilings, roof, walls and doorways. If there is an attic, basement or crawl space, the appraiser must specifically inspect them. Signs of serious water damage or leaks, bad cracks or warping of surfaces may require repairs prior to a mortgage approval. Also, doors and windows must be in proper condition and working order.
The infrastructure of the home includes things such as the water supply and plumbing, heating and ventilation, the electrical system and equipment and any natural gas piping and outlets. The appraiser must see that all of these things are in proper working order by checking lighting, fuse and circuit breaker boxes, electrical wiring, electrical outlets, toilets, sinks, heating systems and the water heater. This does not include any movable appliances such as refrigerators or ovens. If there is a private water well or septic system, they also must be approved.
The appraiser also will inspect the home for health and environmental problems. He will check for signs of rodent infestation, which includes mice, rats and squirrels. If the home was built before 1978, an inspection for lead paint or asbestos will be made. If any of these problems are found, they will require repair or removal prior to a mortgage approval. Any external environmental problems, such as the home being too close to a factory or waste site, can also be an issue for FHA approval.
- Jupiterimages/Brand X Pictures/Getty Images
- FHA Septic System Rules
- Freddie Mac Appraisal Requirements
- VA Appraisal Guidelines
- Prefab Housing Disadvantages
- How to Get a Mortgage for a Home That Heats With Wood
- Habitability Laws for Mortgage
- Should the Home Appraisal Be a Factor When Placing an Offer?
- How Does a Mortgage Company Appraise Your House?