FHA loans and home inspections

The appraisal is not an inspection

The FHA appraiser estimates value and notes whether the property meets HUD’s Minimum Property Requirements and Standards. They spend far less time in the house than a home inspector, don’t operate every system, and don’t write a detailed report for you. A home inspection is your own investigation.

What HUD’s standards cover

HUD’s Single Family Housing Policy Handbook (4000.1) says the property must be safe, sound and secure. In practice appraisers look for:

• Safety: exposed wiring, missing handrails where needed, broken windows, hazards from the site.
• Soundness: structural problems, roof with less than a couple of years of remaining life, foundation damage, active leaks.
• Security: working doors and locks, a secure structure.
• Utilities: working heat, water and electrical service, and safe sewage disposal.
• Defective paint: in homes built before 1978, cracking, peeling or chipping paint must be addressed using lead-safe practices.
• Access: each unit must be reachable without passing through another unit.

Common FHA conditions in Southern California

1. Peeling exterior paint on older homes.
2. Roof damage or a roof near the end of its life.
3. Missing water heater strapping.
4. Unpermitted additions or garage conversions without proper egress.
5. Pool areas without adequate barriers in some cases.
6. Attic or crawlspace access that hasn’t been provided.

New construction and HUD-92051

For newly built homes, lenders may require builder certifications and, in some cases, inspections documented on HUD’s compliance inspection report (form HUD-92051). Ask your lender early what they need, because missing paperwork can delay closing.

Tips for FHA buyers

• Get a home inspection before the appraisal, so you can negotiate repairs once instead of twice.
• Ask the seller about known defects that would trigger appraisal conditions.
• Budget time for repairs and a re-inspection before closing.