September 14, 2022
In 2016, we published an article about FHA loan appraisal rules for certain systems in the home. FHA appraisals have rules governing the process including some that address specific systems in the home.
Make no mistake: some FHA appraisal requirements depend on the local authority, while other requirements have specific guidance. Depending on the issue your experience may vary.
As we noted in 2016, FHA appraisal rules are found in HUD 4000.1, which is the rule book for all FHA single-family mortgage loans, refinancing, and reverse mortgages. Where heating the home is concerned, FHA loan rules include the following:
“The Appraiser must examine the heating system to determine if it is adequate for healthful and comfortable living conditions, regardless of design, fuel or heat source.”
The installed system must have enough capacity to heat the entire home. The rules are clear that it’s considered a deficiency if the heating system does not meet any of the following standards:
- Automatically heat the living areas of the house to a minimum of 50 degrees Fahrenheit in all “gross living areas”, as well as in spaces “containing building or system components subject to failure or damage due” to freezing;
- Must provide healthful and comfortable heat;
- Must rely upon a fuel source that is readily obtainable within the subject’s geographic area;
- Must have market acceptance; and
- Must be able to operate without human intervention for extended periods of time”
FHA loan rules say a centralized air system is not required. As in 2016 if a central unit is installed, it is required to be operational. If the air conditioning system is not operational, “the Appraiser must indicate the level of deferred maintenance, analyze and report the effect on marketability, and include the cost to cure” according to HUD 4000.1.
And what about plumbing? Now, as back when the original article debuted, HUD 4000.1 states, “The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if the plumbing system does not function to supply water pressure, flow, and waste removal.”
HUD 4000.1 also requires the appraiser to flush the toilets and operate faucets to check water pressure and flow, and “to determine that the plumbing system is intact, that it does not emit foul odors, that faucets function appropriately, that both cold and hot water run, and that there is no readily observable evidence of leaks or structural damage under fixtures.”
As you might have guessed, there are things to check where the water heater is concerned, too. The appraiser must ensure the heater has a temperature and pressure-relief valve “with piping to safely divert escaping steam or hot water.”
If the home is served by a septic system, the Appraiser must examine it for any signs of failure or surface evidence of malfunction. Where there are deficiencies the appraiser will require “repair and/or further inspection.”
It’s a good idea to talk to your lender about these issues if you aren’t sure how they may affect the outcome of your transaction. It is true that the rules for these appraisal issues haven’t changed much in the last few years but some issues are more likely to be a problem for certain types of homes. You’ll want to know what is typical in your housing market.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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