How Long Does an FHA Appraisal Take?

An FHA appraisal is a step in securing an FHA-insured mortgage loan. Homebuyers and sellers often wonder about its timeline. Understanding this timeline is important for anyone in an FHA real estate transaction, helping to manage the closing process. This appraisal is distinct from a general home inspection, serving a specific role within the FHA loan framework.

Understanding the FHA Appraisal

An FHA appraisal is a property valuation required for FHA-insured loans. Its purpose is twofold: to determine market value and ensure the home meets FHA’s Minimum Property Requirements (MPRs) and Minimum Property Standards (MPS). These standards protect occupant health and safety, confirm structural soundness, and ensure the property is a sound investment for the FHA.

The FHA appraisal assesses elements like structural integrity, major systems (plumbing, electrical), and health or safety hazards. Examples include peeling paint (potential lead hazards) or missing handrails. This evaluation differs from a conventional appraisal, which focuses on market value, and a home inspection, which provides a detailed assessment for the buyer. The lender, not the buyer, orders the FHA appraisal to protect their investment and the FHA’s insurance.

Key Stages and Typical Timelines

The FHA appraisal process begins after a purchase agreement. The lender orders the appraisal within one to three business days of receiving the executed contract. This assigns the task to an FHA-approved appraiser.

Once assigned, the appraiser contacts parties to schedule the on-site inspection, which occurs within two to five business days. The appraiser’s time at the property for inspection ranges from 45 minutes to several hours, depending on the home’s size and complexity. During this visit, the appraiser takes photos and notes about the interior, exterior, and surroundings.

Following the on-site visit, the appraiser compiles findings and writes the appraisal report. This report writing and submission phase is the most time-consuming part, taking between five and ten business days. The report includes the appraised value, property condition, and any required repairs to meet FHA standards. After submission, the lender reviews it, a step that takes one to three business days. The overall timeline from order to lender approval ranges from 10 to 14 business days, though this can vary.

Factors Affecting Appraisal Duration

Several elements influence FHA appraisal duration. The appraiser’s availability and workload play a role. In markets with high demand or limited FHA-approved appraisers, scheduling and report turnaround times may be longer. Property complexity also affects duration; unique, large, or rural homes require more time to gather comparable sales data and complete a report.

Market conditions also impact the timeline. A rapidly changing real estate market might require appraisers to conduct more research for accurate valuation, potentially extending the process. Difficulties in gaining property access, such as uncooperative sellers or tenant issues, can cause scheduling delays.

If the property does not meet FHA Minimum Property Requirements, the appraiser notes required repairs. While repairs occur later, identifying these conditions can lead to longer report preparation as the appraiser details fixes. If the lender or underwriter requests clarifications or revisions, this can add several days to the duration.

After the Appraisal Report

Once the FHA appraisal report is submitted and reviewed, several outcomes are possible. If the appraised value meets or exceeds the purchase price and the property satisfies FHA Minimum Property Requirements, the loan proceeds to underwriting. This is the most straightforward scenario, allowing the transaction to move forward without delays related to the appraisal.

Sometimes, the appraisal may indicate the property meets value but requires repairs to comply with FHA standards. These conditions might include peeling paint, missing handrails, or structural concerns. If repairs are noted, they must be completed by the seller before the loan can close. A re-inspection by the appraiser is then required to verify the work, which occurs within two to five business days after repairs are finished.

A less favorable outcome is a low appraisal, where the property’s appraised value comes in lower than the agreed-upon purchase price. This creates an appraisal gap; the lender will not finance more than the appraised value. In such cases, the buyer and seller may renegotiate the price, the buyer might cover the difference in cash, or the contract could be terminated. After any necessary re-inspections or clarifications, the lender conducts a final review of the appraisal. A cleared appraisal is a document for the loan underwriter, who uses it to give final approval for the mortgage.