Getting approved for an FHA loan requires an appraisal.

Getting approved for an FHA loan requires an appraisal.

When you purchase a home using an FHA home loan, the home must meet the FHA minimum standards to obtain financing. That means the potential homebuyer needs to work with a valuation professional who can catalog all of a home's features and assess the condition of these elements.

The appraiser's final report on a property is a critical tool for the FHA-approved lender, who will refer to the report when making a final approval decision. It's also an important tool for the current homeowner, because the appraiser may have repair requirements for the property to meet FHA financing eligibility. 

What's the purpose of these standards?
The FHA minimum standards are designed to prevent a home that is in deteriorated or unsafe condition from being sold as is. Additionally, they protect the FHA from making a bad loan. The home is collateral in an FHA loan, and the bank will repossess it if the homeowner stops making payments. If the house is in disrepair or unsafe, the bank could lose money on its investment following the repossession. The appraiser ensures this won't happen. 

"The appraisal helps the FHA-approved lender make an approval decision."

The specific elements that an appraiser needs to look for are addressed in Department of Housing and Urban Development documentation, and include several different requirements. On a basic level, the valuation expert wants to guarantee the safety, security and soundness of the property, but many items contribute to those basic concepts. 

What will you look for?
On a basic level, the appraiser needs to check the building's exterior and interior for any serious issues. The outside of a home should be physically intact, and there should be enough room for the homeowner to maintain the building exterior, according to RealEstate.com.

Beyond ensuring that the home has a functioning roof and complete external walls, the valuation professional needs to check that the structure's interior contains enough rooms for living, sleeping and cooking, and verify that the structure has appropriate sanitation systems in place. Attics, crawlspaces and other enclosed areas must be inspected and have appropriate ventilation, as well. 

If a home fails to meet these standards, the appraiser can issue a recommendation for repair. They should also note issues that are cosmetic or which might develop into more serious problems later on.