FHA and Home Inspections

FHA helps individuals and families become homeowners by providing lenders with mortgage insurance for certain loans.

FHA does not guarantee the value or condition of your future home, and FHA does not perform home inspections. If you find problems with your new home after closing, FHA cannot give or lend you money for repairs, nor can it buy the home back from you.

That’s why it is so important for you, the buyer, to get an independent home inspection. Ask a qualified home inspector to thoroughly examine the physical condition of your future home and give you the information you need to make a wise decision.

Home Inspections Are Not Appraisals

A property appraisal is a document that provides an estimate of a property’s market value. Lenders require appraisals on properties prior to loan approval to ensure that the mortgage loan amount is not more than the value of the property. Appraisals are for lenders; home inspections are for buyers.

FHA, which is part of the U.S. Department of Housing and Urban Development (HUD) requires lenders to obtain appraisals of properties securing FHA-insured loans. FHA requires appraisals for three reasons:

• To estimate the market value of the property.
• To make sure that the property meets FHA minimum property requirements/standards (health and safety).
• To make sure that the property is marketable.

The FHA appraisal process will note property deficiencies that are readily observable and found not in compliance with HUD’s minimum property requirements/standards.  These deficiencies may not be the same as those items noted in a home inspection report which is why it is important for you to get a home inspection.

Spending Hundreds May Save Thousands

When you make a written offer on a home, you should insist that the contract state that the offer is contingent on a home inspection conducted by a qualified inspector. You will have to pay for the inspection yourself, but it could keep you from buying a house that will cost you far more in repairs down the road. If you are satisfied with the results of the inspection, then your offer can proceed.

If you purchase your home through an FHA mortgage, FHA allows buyers to include the cost of an inspection (up to $200) in their mortgage loan.

Top problems that home inspectors uncover

• Roof shingle damage

• Leaking basement

• Improper drainage around home due to improper grading

• Poor attic or crawlspace ventilation
• Missing or inadequate downspouts and gutters
• Faulty wiring
• Amateur workmanship
• Improperly installed building materials

For more information on FHA home inspections, visit www.hud.gov/buying/index.cfm