An FHA Appraisal Is Not a Home Inspection

If you’re buying with an FHA loan, the appraisal your lender orders and a home inspection are separate things. HUD’s buyer form explains the difference.

What the form says

HUD form HUD-92564-CN, For Your Protection: Get a Home Inspection, says an appraisal is required to estimate the home’s value for your lender and does not replace a home inspection. It says FHA does not perform home inspections, does not guarantee the value or condition of your new home, and that if you find problems with your home after closing, FHA cannot give or lend you money for repairs and cannot buy the home back from you.

What the appraiser does

HUD Handbook 4000.1 says the appraiser must observe, analyze and report whether the property meets HUD’s Property Acceptability Criteria, including Minimum Property Requirements. The handbook describes those requirements as general requirements that all homes insured by FHA be safe, sound and secure, and says every property must be safe, sound and secure so the mortgagee can determine eligibility.

What an inspection is

The form says a home inspection only happens if you arrange for one. For a fee, a qualified inspector takes an unbiased look at the home to evaluate its physical condition, estimate the remaining useful life of the major systems, equipment, structure and finishes, and identify items that need to be repaired or replaced.

What HUD suggests

The form suggests asking the prospective inspector for their Standards of Practice or a sample report, and says that if you request an inspection early in the process, you may be able to make your purchase contract contingent on its results. It also says the EPA and the Surgeon General recommend that all houses be tested for radon, and suggests asking the inspector about other tests such as mold, air or water quality, asbestos, lead paint, urea formaldehyde insulation or pests.

When you get the form

Handbook 4000.1 requires the lender to provide the form to prospective homebuyers. One section says at first contact, whether that’s pre-qualification, pre-approval or initial application. The underwriting section says at initial application.