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An FHA appraisal is two jobs in one document. The appraiser estimates market value like any other appraisal, and also inspects the home against HUD's Minimum Property Requirements (MPR) and Minimum Property Standards (MPS) in HUD Handbook 4000.1. If the property fails those standards, FHA will not insure the loan until the issues are cured.
Who can perform an FHA appraisal
Only an appraiser in good standing on the FHA Appraiser Roster may complete the assignment, and the appraisal must be ordered by the lender under appraiser-independence rules. The borrower, the real-estate agent, and the seller cannot select the appraiser or communicate about value.
The appraisal is assigned to the FHA case number, not to the lender. If you change lenders mid-transaction, the first lender must transfer the existing appraisal to the new one — you do not pay for a second appraisal simply because you switched.
What the appraiser inspects
The appraiser walks the home and looks for conditions that affect health, safety, security, and structural soundness:
- Safe and continuous access to the home and to sleeping areas
- Working utilities — electricity, gas, and water must be on at the time of inspection so systems can be tested
- A permanent, functioning heat source capable of maintaining a healthy temperature
- A roof with a remaining useful life of at least two years and no active leaks
- Handrails on stairways of three or more risers, and safe stairs, decks, and porches
- No defective paint surfaces on any home built before 1978 (lead-based paint hazard)
- No evidence of wood-destroying insects, standing water in the crawl space, or foundation movement
- A sanitary water supply and sewage disposal system — well and septic properties get extra scrutiny, including distance requirements between the well and septic field
- No hazards on site such as an abandoned fuel tank, an unprotected drop, or contaminated soil
Cosmetic issues do not fail an FHA appraisal. Worn carpet, dated cabinets, a cracked driveway, or old but functioning appliances are not MPR problems.
"Subject to repairs" and how to clear it
When the appraiser finds an MPR issue, the appraisal is completed subject to repair. The repair must be made, and the appraiser (or in limited cases another qualified party) must certify completion on Form HUD-92051, Compliance Inspection Report, before the loan can close.
Three practical paths when repairs come back:
- The seller repairs before closing — the most common outcome.
- The buyer repairs with the seller's written permission before closing, which carries risk if the deal falls apart.
- Switch to a 203(k) rehabilitation loan and finance the repairs into the mortgage. See our 203(k) consultant guide.
An escrow holdback for weather-delayed exterior work (a repair escrow) is possible but must meet FHA and lender rules, and lender overlays vary.
Appraisal validity and second appraisals
The appraisal is valid for 180 days from the effective date. A single 30-day extension is available if the borrower signed a valid sales contract before the original expiration.
A second appraisal is required in a small number of situations, including certain property flips — when a home is resold between 91 and 180 days after acquisition and the resale price is 100% or more above the seller's acquisition price, FHA requires a second independent appraisal. Resales within 90 days of the seller's acquisition are generally not eligible for FHA financing at all.
Reconsideration of Value (ROV)
Since Mortgagee Letter 2024-07, FHA borrowers have a defined right to challenge an appraised value. The lender must disclose how to request an ROV, the borrower may submit up to five comparable sales or point out factual errors, and the appraiser must respond in writing to the request. A borrower who believes the appraisal reflects bias may also file a complaint with HUD.
FHA appraisals are not home inspections
This is the single most expensive misunderstanding in FHA lending. The appraisal protects HUD's insurance fund; it is not a condition report for you. HUD's own guidance ("For Your Protection: Get a Home Inspection", Form HUD-92564-CN) tells buyers to hire an independent inspector. Do it — a $400–$700 inspection routinely finds items an appraiser is not required to look for.
Cost, timing, and who pays what
| Item | Typical cost | Who pays | When |
|---|---|---|---|
| FHA appraisal (single-family) | $550–$800 | Buyer | Ordered within days of contract |
| Manufactured home appraisal (1004C) | $650–$950 | Buyer | Same |
| Re-inspection / HUD-92051 | $150–$250 | Negotiable | After repairs |
| Reconsideration of Value | Usually no fee | — | Within lender's ROV window |
| Second appraisal (rare, cash-out/flip rules) | Full fee | Buyer | Before clear-to-close |
Turn times run three to seven business days in metro markets and can stretch to two or three weeks in rural counties with few roster appraisers. Order early: on a 30-day contract, an appraisal ordered on day eight rather than day two is the most common reason a closing date slips.
Worked example: a low appraisal on a $400,000 contract
You are under contract at $400,000 with 3.5% down. The appraisal returns at $385,000.
- FHA lends on the lower of price or value, so the maximum base loan is 96.5% of $385,000 = $371,525.
- Your required investment is now $13,475 plus the $15,000 value gap = $28,475 to keep the same contract price.
- Renegotiating to $385,000 puts you back at roughly $13,475 down.
- An FHA appraisal stays with the case number for 180 days, so a new lender will inherit the same $385,000 value — switching lenders does not reset it.
Those three outcomes — cover the gap, renegotiate, or file a Reconsideration of Value — are the only real options, which is why an appraisal contingency matters on FHA contracts.
The seven repair items we see most often
- Peeling or chipping paint on any pre-1978 home, including detached garages and fences
- Missing or loose handrails on stairs with three or more risers
- Broken windows, missing screens where required locally, and inoperable exterior doors
- Roof with visible active leaks or less than two years of remaining life
- Utilities shut off at inspection — FHA requires them on so systems can be tested
- Exposed wiring, open junction boxes, or a missing GFCI near water sources
- Well and septic separation distances that fall short of HUD standards
Reconsideration of Value, in plain steps
Under Mortgagee Letter 2024-07, your lender must give you written ROV instructions. Submit up to five comparable sales that closed before the effective date, are closer or more similar than the appraiser's comps, and explain in one paragraph why each is better. Factual corrections — wrong square footage, a missed finished basement, a bathroom count error — carry more weight than opinion. The appraiser must respond in writing.
Questions to ask before you write the offer
- Is the seller willing to complete MPR repairs, or should this be a 203(k)?
- Are utilities on, and if the home is vacant, who will turn them on?
- For pre-1978 homes, is there any visible paint failure?
- Does the property have a well or septic system requiring certification?
- Are there additions that were built without permits?