FHA Appraisal Requirements in Texas

To pass an FHA appraisal, an FHA-financed property must be safe, secure, and structurally sound. It must have properly functioning electrical systems and major home systems. Also, there must be no health and safety hazards.

Read on to learn everything you need to know about FHA appraisal requirements in Texas and what to expect after the appraisal.

What Is an FHA Appraisal?

An FHA appraisal ensures the property meets the safety and habitability standards set by the U.S. Department of Housing and Urban Development (HUD).

It also determines the property’s estimated market value, which lenders use to calculate your mortgage’s loan-to-value ratio.

Here’s how the process works:

• A licensed FHA appraiser visits the home and checks its overall condition. They look for any readily observable damage or issues that require repairs. They document the issues and take photos. If needed, they may provide an estimated cost for repairs.
• Next, the FHA appraiser reviews recent sales of similar homes in the area. They estimate the home’s market value based on the site visit and market research.

Remember: A property appraisal does not replace a home inspection. You should still have a professional inspector check the home to uncover issues the appraisal may not identify.

FHA Appraisal Requirements Checklist

FHA appraisers follow HUD guidelines when inspecting a property. FHA appraisal requirements are generally the same in Texas as in other states.

Here are the common requirements:

Inside the Home

•  Electrical Systems: All electrical systems must be functional with no loose/exposed wires.

• Home Systems and Appliances: All essential utilities, including water, electricity, gas, and sewage service, must be functioning properly. There should be a permanent heating system capable of heating the home properly. The appraiser will inspect the heating and cooling systems to ensure they have no issues. They may also note observable issues with built-in appliances.

• Water and Plumbing Access: The property must have an adequate supply of safe water. All sinks, toilets, showers, and bathtubs must be operational. Hot water must be available for bathing.

• Attic and Crawl Spaces: FHA appraisers check these areas for pests (commonly termites), moisture, and ventilation problems.

• Doors: Exterior doors must be functional and secure. Any damaged door should be repaired or replaced.

Outside the Home

• Property Access: The home and any outbuildings should be safe to access.
• Roof and Exterior Condition: The exterior, foundation, and roof must be in good condition. Appraisers often check for holes, loose/missing shingles, and damaged gutters or downspouts. 
• Foundation: FHA appraisers verify whether the foundation appears structurally sound. It must have adequate drainage to prevent water damage. Also, there should be no significant cracks or signs of major settling.
• Side Grading: The property’s grading should allow water to flow away from the structure without causing runoff problems for neighboring lots. It should also help reduce the risk of erosion and soil settlement.
• Parking: There must be enough parking space for residents and guests. For buildings with ground-level or low windows, parking areas should not be too close to help prevent exhaust-related health concerns.

Interior and Exterior

• Safety Hazards: There must be no health and safety hazards inside or outside the home. In houses built before 1978, there should be no chipping/peeling lead-based paint. Also, the property should not have any broken windows, exposed nails, or trip hazards.
• Infestations: The home must not have any active wood-destroying insect infestations.

What to Expect After an FHA Appraisal

Once the FHA appraiser confirms that the property meets HUD safety and habitability standards and the lender accepts the market value, your FHA loan can move forward to closing.

However, in some cases, an FHA appraisal reveals issues that must be resolved before the lender approves the property.

Common issues include:

The property requires repairs.

In this case, the lender may conditionally approve the home, provided that you and the seller will fix the issues before closing. The appraiser provides a projected market value when the home is repaired.

For repairs that can only be completed after closing, the lender may allow repair funds to be placed in an escrow account.

The home valuation is lower than expected.

If the FHA appraiser provides an estimated market value that’s lower than the purchase price, you can:

• Cancel the contract and receive your deposit back, depending on the contract terms.
• Negotiate a lower price with the seller.
• Use your own funds to cover the difference if the lender allows it.

The seller refuses to fix the issues.

The property may not qualify for FHA financing if the seller refuses to address a serious health or safety concern, such as structural foundation problems that affect habitability.

Get Preapproved by a Trusted Lender

Whether you’re buying a home or refinancing, your lender will require an appraisal if you’re using an FHA loan.

Use the FHA appraisal requirements checklist above to determine whether the property you want to buy in Texas meets HUD standards.

Ready to get preapproved? Reach out to Texas United Mortgage today to start your application! Our seasoned loan officers will help you secure the right loan terms for your financial needs.

Next, read our extensive article discussing the FHA 203(k) loan requirements if you want to roll your mortgage and home renovation costs into one single loan.