FHA Appraisal Process: How Long Will It Take?

When buying a home with an FHA loan, the appraisal process is crucial in ensuring the property meets FHA requirements and determining its fair market value. The appraiser spends 45 minutes to several hours evaluating the home, and the report is usually complete within 7 to 10 business days. Homebuyers often wonder about the FHA appraisal timeline and the factors influencing it. This article explores the FHA appraisal process, requirements, and factors affecting the timeline.

Key Takeaways

  • FHA appraisals typically take up to 10 business days to complete after the appraisal appointment.
  • The appraiser spends 45 minutes to several hours evaluating the home during the appointment.
  • Factors such as the size, property type, location, and features of the home can affect the appraisal timeline and cost.

What Is An FHA Appraisal?

An FHA appraisal is an assessment of a property’s value and condition conducted by a certified appraiser. Unlike a conventional appraisal, an FHA appraisal also ensures that the property meets the minimum property requirements set by the Federal Housing Administration (FHA). These requirements focus on the health, safety, and structural integrity of the home.

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How Do FHA Appraisals Work?

The FHA appraisal process involves several steps:

  • Scheduling the appraisal appointment
  • Evaluating the home’s condition and amenities
  • Identifying comparable recent sales of similar properties
  • Checking for health and safety issues
  • Assessing the property’s structural integrity

During the appraisal appointment, the appraiser will spend anywhere from 45 minutes to several hours evaluating the home, depending on its size and complexity.

When Does the FHA Appraisal Happen?

The FHA appraisal typically occurs after the buyer has signed a purchase agreement and the lender has ordered the appraisal. The appraisal must be completed before the lender can approve the loan and proceed with the closing process.

What Are the FHA’s Appraisal Requirements?

The FHA has specific appraisal requirements that focus on the following aspects:

  • Safety: The property must be free from hazards that could endanger the occupants.
  • Security: The property must provide adequate protection against criminal intrusion.
  • Soundness: The property must be structurally sound and free from defects that could affect its stability.

Additionally, the FHA requires that the property has:

  • Working utilities
  • A functional heating system
  • No peeling paint (for homes built before 1978)
  • No exposed wiring or other electrical hazards
  • A roof with a remaining life of at least 2 years

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Who Pays for the FHA Home Appraisal?

In most cases, the homebuyer is responsible for paying the FHA appraisal fee. The fee is typically included in the closing costs and can range from $400 to $700, depending on the property’s size, location, and features.

The FHA Appraisal Timeline

The entire FHA appraisal process usually takes 8 to 10 business days from the time the appraisal appointment is conducted. During the appointment, the appraiser will spend anywhere from 45 minutes to several hours evaluating the property, depending on its size and complexity.

Factors Affecting FHA Appraisal Timeline

  • Property size and complexity
  • Appraiser’s workload and availability
  • Completeness of loan application and supporting documents
  • Repairs or improvements needed to meet FHA requirements
  • Location and accessibility of the property
  • Market conditions and demand for appraisals in the area

What Are The Stages of The Appraisal Process?

The typical stages of the appraisal process include:

  1. Ordering the appraisal: The lender arranges for an appraiser to visit the property.
  2. Property inspection: The appraiser visits the property to assess its condition, size, features, and surrounding area.
  3. Data collection and research: The appraiser gathers comparable property sales data and researches market trends.
  4. Valuation analysis: The appraiser analyzes the collected data to determine the property’s market value.
  5. Report writing: The appraiser writes a report summarizing their findings and estimated value.
  6. Review and approval: The lender reviews the appraisal report and decides whether to approve the loan based on the appraised value.

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What Happens After the Appraisal?

Once the appraisal is complete, the appraiser will submit a report to the lender. The report will include a detailed description of the property, its condition, and the appraised value. If the appraised value is less than the purchase price, the buyer and seller may need to renegotiate the price or the buyer may need to make up the difference in cash.

How Much Do FHA Appraisals Cost?

FHA appraisals typically cost between $400 and $700, which is slightly more expensive than the $300 to $500 range for conventional home appraisals. The exact price varies based on several factors, including the size of the property, its type (single-family, multi-unit, etc.), location, and any unique features or challenges it presents. Homebuyers should be prepared to cover this cost as part of their closing expenses when obtaining an FHA loan.

How Do FHA Appraisers Assign A Home Value?

To determine fair market value, FHA appraisers use the Uniform Residential Appraisal Report (URAR) and follow standardized practices. They consider the home’s size, condition, location, and features compared to at least three recently sold properties (called comparables or comps). Since no two homes are exactly alike, they make dollar adjustments for key differences in determining the subject property’s value.

Tips for a Smooth FHA Appraisal Process

  • Ensure the property is clean and accessible for the appraiser
  • Provide relevant information about recent upgrades or improvements
  • Address known health, safety, or structural issues before the appraisal
  • Be prepared to negotiate repairs or price adjustments if issues are identified
  • Communicate openly with your lender and real estate agent
  • Allow the appraiser to work independently during the assessment
  • Understand the appraisal requirements and timeline
  • Be patient and flexible, as delays may occur due to various factors

Final Thoughts

The appraiser spends 45 minutes to several hours evaluating a home, and the report is usually complete within 7 to 10 business days. The FHA appraisal process is essential when purchasing a home with an FHA loan. Understanding the appraisal requirements, timeline, and influencing factors helps homebuyers and sellers prepare for a smooth and successful transaction.

Frequently Asked Questions (FAQ)

What is the difference between an FHA appraisal and a regular appraisal?

An FHA appraisal is more in-depth than a standard appraisal. In addition to determining market value, FHA appraisals also require the appraiser to inspect the property for compliance with HUD’s minimum property standards for safety, security, and soundness. Conventional appraisals focus primarily on value and don’t have these additional property condition requirements.

Can I skip the FHA appraisal if I’m willing to pay more?

No, the FHA appraisal is a mandatory requirement for all FHA loans. It’s designed to protect both the buyer and the lender by ensuring the property is safe and marketable. Even if you’re willing to pay more than the appraised value, the lender cannot approve financing without a completed FHA appraisal showing the home meets minimum standards.

How long does it take to transfer an FHA appraisal?

FHA guidelines state that the original lender must transfer the appraisal to the new lender within five business days of the borrower’s request. However, the original lender can withhold the transfer until they are reimbursed for the appraisal cost if they haven’t been paid yet.

How long is an appraisal good?

An appraisal is typically valid for six months.  This means the appraised value should be reflective of market value for that timeframe. If more than six months pass, a new appraisal may be required.

What’s the longest an appraisal can take?

The appraisal turnaround time can vary depending on the appraiser’s schedule and the complexity of the property.  Generally, it takes between 7 and 14 days to complete an appraisal.

What happens after appraisal?

After the appraisal is completed, the lender will review it to determine the property’s value. If the appraised value meets or exceeds the loan amount, the loan process can move forward.  However, if the appraisal comes in lower than expected, you may need to adjust the loan amount or come up with a larger down payment.

What is the final step in an appraisal?

The final step in the appraisal process is when the lender receives the appraisal report and reviews it.  Once they are satisfied with the value, they will issue a loan approval.

What are appraisal costs?

The cost of an appraisal can vary depending on the location, property type, and complexity of the appraisal.  Generally, appraisal costs can range from $300 to $500.

Jean Folger

Jean Folger brings over 15 years of expertise as a financial writer, specializing in areas such as real estate, investment, active trading, retirement planning, and expatriate living. She is also the co-founder of PowerZone Trading, a firm established in 2004 that offers programming, consulting, and strategy development services to active traders and investors.

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