We get asked this question often by clients applying for an FHA home loan. Unfortunately, there is a lot of misinformation online regarding FHA appraisal and inspection requirements. This has led to much frustration and confusion on the part of buyers and sellers alike. So let me start by giving you the simple answer.
FHA Does Not Require a Home Inspection
The Department of Housing and Urban Development (HUD) administers the FHA loan program. It is HUD that establishes all rules and guidelines for this program.
While HUD does not require borrowers to have the property inspected they strongly encourage it. In fact HUD requires all FHA borrowers to sign the HUD-92564-CN form when applying for an FHA loan. By signing this form borrowers accept the importance of getting an independent home inspection and accept the consequences that may come with not getting one.
Here is how the form reads:
For Your Protection: Get a Home Inspection
Why a Buyer Needs a Home Inspection
A home inspection gives the buyer more detailed information about the overall condition of the home
prior to purchase. In a home inspection, a qualified inspector takes an in-depth, unbiased look at
your potential new home to:
- Evaluate the physical condition: structure, construction, and mechanical systems;
- Identify items that need to be repaired or replaced; and
- Estimate the remaining useful life of the major systems, equipment, structure, and finishes.
Appraisals are Different from Home Inspections
An appraisal is different from a home inspection. Appraisals are for lenders; home inspections are
for buyers. An appraisal is required to:
- Estimate the market value of a house;
- Make sure that the house meets FHA minimum property standards/requirements; and
- Make sure that the property is marketable.
FHA Does Not Guarantee the Value or Condition of your Potential New Home
If you find problems with your new home after closing, FHA can not give or lend you money for
repairs, and FHA can not buy the home back from you. That is why it is so important for you, the
buyer, to get an independent home inspection. Ask a qualified home inspector to inspect your
potential new home and give you the information you need to make a wise decision.
Radon Gas Testing
The United States Environmental Protection Agency and the Surgeon General of the United States have
recommended that all houses should be tested for radon. For more information on radon testing, call
the toll-free National Radon Information Line at 1-800-SOS-Radon or 1-800-767-7236. As with a home
inspection, if you decide to test for radon, you may do so before signing your contract, or you may
do so after signing the contract as long as your contract states the sale of the home depends on
your satisfaction with the results of the radon test.
Be an Informed Buyer
It is your responsibility to be an informed buyer. Be sure that what you buy is satisfactory in
every respect. You have the right to carefully examine your potential new home with a qualified
home inspector. You may arrange to do so before signing your contract, or may do so after signing
the contract as long as your contract
states that the sale of the home depends on the inspection.