FHA Mortgage Loans and Home Inspections

When you buy a home with an FHA mortgage, there is a process known as a appraisal that must happen prior to loan approval. An FHA appraisal involves a professional who reviews the property to insure it meets FHA minimum standards for safety, economic viability, and livability. Some mistake the FHA appraisal process for a home inspection, but the FHA and HUD are quick to point out that the appraisal is NOT a complete, top-to-bottom review of the home.

We get comments and questions about this process in our comments section, and many of them have a familiar theme. Consider this recent reader comment:

“…it boggles my mind how I could have bought my home 5 short months ago with an FHA loan and found out that it was infested with black mold weeks into the sale and nobody at CHFA nor FHA will listen to me or help myself and my two little girls.”

There are many ways a home can develop a mold issue, and there’s no way to tell from the reader comment here whether the problem existed at purchase time or not. That said, borrowers who fail to pay for the optional, but strongly recommended home inspection and rely on the appraisal only run the risk of discovering problems like these later on.

It’s not for us to speculate whether or not the reader in this particular case paid for a home inspection or declined to do so. If the mold was an issue that did not exist prior to purchase of the home, the homeowner would need to seek a mold abatement remedy; if a home inspection was performed, and the mold issue was missed, it’s entirely possible the reader may need to seek legal counsel to see what remedies might be available.

But if a home inspection was not performed, and the borrower took ownership of the property, there is nothing the FHA can do to help. The FHA official site discusses the home inspection issue at length in this downloadable .PDF file from the official site: http://portal.hud.gov/hudportal/documents/huddoc?id=92564-cn.pdf

The document includes statements like these that home buyers should definitely pay attention to:

“A home inspection will only occur if you arrange for one. FHA does not perform a home inspection. Decide early. You may be able to make your contract contingent on the results of the inspection.”

And also, “An appraisal is different from a home inspection and does not replace a home inspection. Appraisals estimate the value of the property for lenders. An appraisal is required to ensure the property is marketable. Home inspections evaluate the condition of the home for buyers.” It will be the borrower’s job to locate and hire a properly credentialed home inspector.

It’s always the borrower’s responsibility–not the FHA appraiser’s–to insure the home is ready for purchase from top-to-bottom, to the borrower’s satisfaction. The best way to do this is to pay for the optional home inspection to avoid surprises such as the one mentioned in the reader comments