James S. Graner


FHA Property Guidelines Are Not Understood by Many Mortgage Originators!

I receive FHA appraisal orders from many different people and many different mortgage companies across the country. I know many times these Mortgage Professionals tell me they telephone interview a perspective borrower about their home and after I leave the home it is obvious they have no idea what questions to ask before ordering the FHA appraisal.

I am sometimes told "The house does not sound to be in the best condition," or a similar line. On many occasions the home is just slightly dated and meets all FHa conditions, the originator worried for no real reason and might have scared their borrower away with his/her concerns about the FHA Appraisal. Other occasions, I come to a home with a statement of slight concern and the roof if leaking, the windows are rotted, peeling interior paint, electrical systems not completely functioning, etc...

Allright, I have identified the problem, now I would like to share a solution. FHA Appraisers used to have to use a checklist supplied by HUD for evaluating whether a home meets FHA property standards. These FHA checklists were included in the FHA appraisal. HUD no longer requires or desires these valuation condition forms (VC sheets.) Now FHA appraisers are held to a standard of reporting the same items of concern within the apraisal report, without using the VC sheets. Well at least the VC sheet made appraisers appear more like the messenger instead of a ruthless and unpredictable home inspector.

Here are some of the items that HUD requires each home to be checked, before providing FHA mortgage insurance on a property.

Any termite infestation is not acceptable to HUD.

Attics and crawl spaces are required to be checked by the appraiser. A "Head & Shoulder" inspection is required for all FHA appraisals. Sometimes attic access is blocked by a closet filled with things. Appraiser has no responsibility for moving personal items and would be at risk by moving and taking responsibility for such items. Stored things get broken when moved or are discovered broken, I have not talked to a FHA appraiser that is willing to move stuff to access a crawl space or an attic entry (closet scuttle.) We can condition the appraisal to have these items cleared and return. We just are not in the moving business.

Roofs must have an estimated two year remaining life. Snow covered roofs require revisit to the home or a roofing inspection. Flat top roofs no longer require an automatic roofing certification. Exterior surfaces cannot be unprotected. Painted surfaces require attention if there is an issue of wear on the home or surface due to maintenance.

Electrical and plumbing systems must be fully operational. Checking a"Representive sample" of electrical systems is part of the observation. Each home must have a hot water source and must be operating at the time of observation. Furnace or certral heating system must be able to be turned on and heard operate by the FHA appraiser. Summer observations still need the system checked. Climates not requiring a heating system do not need furnace check. Southern tip of Florida, Hawaii, etc.. 

Safety:  Window, doors, steps & handrails, reverse feature for automatic garage doors and general safety concerns are part of the FHA appraisal observation. Homes built before 1978 cannot have any cracking, peeling, or otherwise defective interior paint surface.

RURAL CONCERNS:   Onsite wells and sanitary septic systems do not necessarily require testing, however underwriters usually ask for these tests. Check with your underwriters if this is a concern. The FHA Appraisal Report must state distance of well from sanitary system and comment of availablity of public sewers. Roads to home must be able to traveled in all weather. (We know flooding, ice and heavy snow are not the fault of the road.)

Outside of the Property: Here are some concerns outside of homeowner's control. Sink Holes, slush pits, improvements (home) within fall distance of towers, excessive hazardous noises (includes street traffic & airport travel paths,)  Soil contamination is a concern from environmental concerns.

In general the appraiser must look for any safety of occupants, structural condition, or soundness concern of the improvements of the home. The FHA Appraisers know this as HUD's three S's. Please understand there are more things in the FHA protocol that I did not mention here. I tried to gather the most frequent concerns that I know of.

 James S. Graner
Real Estate Appraiser
ph  (636)916-4325
cell (314)277-3336
fax (636)949-2637
Website http://appraisalmo.com

Comment balloon 35 commentsJames Graner • December 15 2008 11:13AM


This is very interesting.  I love to stay on top of the HUD/VA requirements.  Helps when showing homes to know what is going to be a problem and what is not.


Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 9 years ago

Thank you, and you are right.  Many times have I asked various lenders what to look for in a home to go FHa, hoping for a comprehensive list, and most had no clue.   

Posted by Joel Weihe, Helping you to use your VA home loan benefits (Realty World Alliance) over 9 years ago

Thanks for posting!

Posted by Brenda Abide (Weichert Realtors Benchmark) over 9 years ago

It just is not part of training for the originator. Nothing against the people, just not part of the business model. I believe this might help some for those interested in a traditional FHA mortgage or a reverse mortgage.

Posted by James Graner (Residential Services: http://appraisalmo.com) over 9 years ago

There is such a disconnect.  I dont understand why, since we are all part of the same process, that we all dont have the same training.  Realtors and appraisers should have the same information, and loan officers should definately understand what we do and what our ethical requirements are.  This disconnect is part of the problem that should be addressed.

Posted by Patti Persia, Licensed Real Property Appraiser (Appraising in Delaware) over 9 years ago

Thanks for the information. We are seeing more and more FHA loans now and it's good to know what FHA is looking for.

Posted by Michelle Rottach, Scott County Iowa Real Estate (RE/MAX Elite Homes) over 9 years ago

Good information would like more information on the termite inspection we have been told recently that termite inspection no longer a FHA requirement?






Posted by John H. Douglas over 9 years ago

Thank you so much for this information! As a loan originator I have realtors scareing clients off of FHA loans simply because they think the property will be ripped apart by the appraiser.

Posted by Jennifer Riley (Real Estate Mortgage Network, Inc.) over 9 years ago

Thanks for the insight James. I am  lender and I am aware that FHA / VA appraissla are a little more "scrutinizing" than the normal appraisal. I appreciate you taking the time to go over some basc items that if known in advance, can especially help the realtors that I deal with to have a heads up on a certain property that may require some TLC.

I also like to keep ontop of lending requirements because it obviously makes my job easier. I do try to educate the realtors that I work with about some of these things so that we can work together.


Gerard Ladalardo, CMPS

Posted by Gerard Ladalardo, CMPS over 9 years ago

Thanks for the information James.  I knew about some of these, but you filled in some interesting blanks.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) over 9 years ago

Great article!  I often have Realtors tell me the same thing, the house has a few problems so we can not do FHA.  When I ask for a list or look at photos, its all minor wear and tear that any appraiser would mark as cosmetic and any underwriter would accept.  There is a misconception that because FHA is tougher on condition that they will not accept any problems, and buyers get talked out of an FHA before they even give it a chance.

Posted by Roland Carrillo, PhD - Mortgage Consultant over 9 years ago

Mr. Douglas,

I know that several states were exempted from termite inspections within the past few years, including my home state of Missouri. I agree with you on that point.

While termite inspectors are no longer required to look at many of the properties, FHA appraisers are still required to look for the frame of the home touching the earth, any termite tunneling in around the exterior of the home and visible areas within the home, and any weakened wood that might lead one to be suspect of termites that could be caused by termites or other wood destroying insects. This is still part of the scope of the FHA Appraisal Report.

Posted by James Graner (Residential Services: http://appraisalmo.com) over 9 years ago


Thanks for the reply in regards to termite inspections this information is very helpful and will help me

o better infrom my clients thanks.

Posted by John Douglas (Berkshire Hathaway HomServices Partners Realty) over 9 years ago

I thank many of you for the warm comments on my blog piece.

Thank You All! I received a call from a gentleman that wants to use this for a helpful article to his clients and potential clients.

Posted by James Graner (Residential Services: http://appraisalmo.com) over 9 years ago

Hi James,

Thank you for this post, it is very helpful.  I've just started to run into this type of question and never had much clarity on it.  My most recent experience was with an appraiser who was concerned that wall mounted speakers were missing (and the holes that use to house the speakers needed to be covered).  After some explanation, we "passed."  However, this was not anticipated and did slow things down.

Best regards,

Posted by Mike Hughes, Services Newton, Brookline, Lexington, Waltham & W (Mike Hughes Team - Hughes Residential) over 9 years ago

James - thanks for posting this information, it already has cleared a couple of things up for me

Posted by Mike Saunders (Lanier Partners) over 9 years ago


What a great post! You went over so many of the common errors in judgment that can kill or make an FHA deal. I'm happy to re-blog it and spread your word. I also took the liberty of posting it the USDA RD and VA groups since these guidelines (with very few additional guidelines in the case of RD) apply to those loan programs as well. Thanks for the great info!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Posted by Gerry Suarez Jr., Expert Home Loan Advisor (Mortgage Financial Group, Inc.) over 9 years ago

James - it's always good to be reminded and updated on what FHA appraisers are required to do.  Will definately be passing this info along.

Posted by Donne Knudsen, CalState Realty Services (Los Angeles & Ventura Counties in CA) over 9 years ago

Ha!  I read this after posting on your previous post: "Attics and crawl spaces are required to be checked by the appraiser. A "Head & Shoulder" inspection is required for all FHA appraisals. Sometimes attic access is blocked by a closet filled with things. Appraiser has no responsibility for moving personal items and would be at risk by moving and taking responsibility for such items. Stored things get broken when moved or are discovered broken, I have not talked to a FHA appraiser that is willing to move stuff to access a crawl space or an attic entry (closet scuttle.) We can condition the appraisal to have these items cleared and return. We just are not in the moving business."  I find it tempting just to mark the 'no attic' box in situations such as these.

Posted by Sara Goodwin, Portland, Oregon Appraiser (Ashcroft & Associates) over 9 years ago


I never want to be accused of breaking somebody's junk that sat hidden away for many years. Partial basements with a crawl space under and addition often cause problems as well.

I can recall one time the crawl space entry was under a brand new 12' x 16' deck. About the middle, I was tempted to tell this woman, who my boy played football with her son, to crawl 12 feet under the deck and take this picture.

I did the deed, after changing clothes, however I think the proper statement would have been "The deck has to go. I do not feel like considering this an accessible window." This FHA Appraisal was painful in many ways.



Posted by James Graner (Residential Services: http://appraisalmo.com) over 9 years ago


Thank you for the kind words. Many have been very kind to me!


Posted by James Graner (Residential Services: http://appraisalmo.com) over 9 years ago

Hi James, Thanks for the info. Keep posting best.

Best - Sash

Posted by Sasha Miletic - Windsor Real Estate (RE/MAX Preferred Realty Ltd.) over 9 years ago

James, I was reading your post and the snow covered roof caught my attention. Per HUD:

A. In areas where the snow is likely to lay for more than a few days:

1: The appraiser is required to make an extra thorough inspection of the attic and all visible roofing areas for signs of failing roofing materials.

2: If there is evidence of damage and/or leaks the appraiser is to condition for further inspection.

3: If there is no evidence of damage and/or water leaks. The borrower must be informed that the roof was snow covered at the time of the appraisal and that it is acceptable to the purchaser without any warranty or guarantees from HUD-FHA.

Posted by Kenneth Miller, NW Ohio FHA Appraiser (Miller Appraisals) over 9 years ago


Thank you for the post. I understand that you are slightly to the north of where I am at in Saint Charles, Missouri. In most areas of the us, most likely including yours, snow does not usually sit for a long time without some melting. I understand this was written on behalf of some of the New England Area Mountains along and around the New York border, and perhaps a couple of other small pockets of high elevation.

Great information, Thank You for sharing here.

Posted by James Graner (Residential Services: http://appraisalmo.com) over 9 years ago

Thanks for your post.  After more than a year, I found your information very helpful.  Ironically I only stumbled upon it by following the link from the inspector that blasted you.  I guess we all have our days.  

My issue is with an REO that will unlikely get through the FHA appraisal.  Would be a great buy, but it looks like FHA is the only option.

Thanks for the post, Active Rain is a great source of info thanks to folks like you.

Mike Nastri

Posted by Franklin & Brentwood, TN Homes Mike Nastri - Rodney Kennedy, It matters to us as much as it matters to you. (Keller Williams Realty) over 9 years ago

James, Thanks for your post.  I'd like to reference it on my website! Many agents in my local area have no idea what to look for when they preview property.  Education classes don't cover this material so unless brokers elect to teach "street smart education" in-house, it doesn't happen.

Much appreciated!

Jenny Kottel, Sparks NV

Posted by Jenny Kottel (Prudential One Realty) over 9 years ago


In my continuing education classes, for appraising, I sometimes get different sources if I look hard enough. I have been onsite to a manufactured home factory, taught be a contract lawyer, a interior designer, and even a HOME INSPECTOR.

You may certainly reference this on your website, I am completely flattered. 

Posted by James Graner (Residential Services: http://appraisalmo.com) over 9 years ago


That Home Inspectior was upset, WOW! I do not know what is out of order with the REO place, however HUD will allow utilities to be turned on for appraisals and Home Inspections, if other items are small things, consider asking for permission to repair, I marvel at how negociation has come around within the past few months.

Good Luck on the purchase.

Posted by James Graner (Residential Services: http://appraisalmo.com) over 9 years ago

James, thanks for your insight. I have been somewhat in the dark on the requirements to pass the appraisal process, now I will have a better understanding.

Posted by Keith Pound, Realtor, Auctioneer - Louisville, KY - 502-645-5950 (EXIT REALTY CRUTCHER) over 9 years ago


Looks like FHA will be a major source of mortgage financing for a while. Good idea to look at these for the benfit of not spending time on properties that might not meet the requirements.

Posted by James Graner (Residential Services: http://appraisalmo.com) over 9 years ago

This is exactly the type of post I was seeking, James.  I have a buyer who just submitted an offer on an REO property. The buyer will be using an FHA program for financing. The listing agent states now that this home will not qualify for an FHA loan because there is some peeling paint on one of the ceilings and the utilities are off.

I am trying to find out how, or if, I can at least get the listing agent to present the offer. It is solely HIS opinion that the house will not appraise out.  In the meantime, knowledge is power so thank you once again.

Posted by Judy Boyle, MBA CDPE CRP (RE/MAX Signature Properties) about 9 years ago

Hi James, hopefully a quick & easy question for you.  Have a friend who inherited his parent's house...lovely home, well maintained, with some updates over the years.  Wants to sell it AS-Is or with minimal work to be completed.  The windows are original from when the house was built in 1953.  If they are all functioning (opens & closes/slides with ease), will they be fine in your opinion as far as passing FHA inspection?  Thanks for your thoughts.

Posted by Keith & Shannon French, Baltimore's Best for Rent To Own Homes (www.KeithandShannonFrench.com) over 8 years ago

I actually thought this was a very arrogan blog post.  I close around 100 loans/year and probably 1/2 of them are FHA loans.  What I have found is that the HVCC is allowing terrible unfit appraisers to be hooked up with the appraisal management companies and write up crappy appraisals that don't reflect actual home values.  What makes it worse is that no one holds the appaiser accountable for their terrible work.  When you do get the appraisal back 2 WEEKS after you order it the report will most likely need additional comments or pictures or comparable properties because the appraiser didn't do their job correctly in the first place!  Then it will take another 2 WEEKS to get those changes back.  Appraisers should be the ones to know FHA property standards if they are an approved FHA appraiser.  Loan officers are required to know the loan requirements.  I appreciate the fact that you know FHA property standards but isn't why you are an FHA appraiser?  Good luck with your business and you shouldn't criticize loan officers so much,  without us you would have a hard time paying your bills.


Posted by Cory almost 8 years ago


The blog was written for education purposes. I received numerous phone calls from Reators and Mortgage Professionals stating they would benefit from figuring out ahead of time if a home could potentially qualify for FHA financing. This blog was helpul to many. Sorry you were offended.

Posted by JAMES GRANER over 7 years ago

I hope this info is still valid.  Any chance I can talk you into an update?

Posted by Steve Roake (Keller Williams Realty Infinity) over 7 years ago