These are commonly referred to as comparable sales or 'comps.' The appraiser might also visit the home being purchased, to evaluate the property inside and out.Īfter this thorough investigation, the appraiser will write a report to detail his or her findings. To determine market value, a licensed appraiser will review similar homes that have sold recently in the same area as the subject property. The lender wants to make sure they're not lending more than the home is actually worth. But in all cases, the overall goal is the same.

That includes FHA, VA and conventional financing. This is especially true for FHA loans, where the borrower can put down as little as 3.5% of the purchase price.Īll types of mortgage loans require an appraisal. In a typical home-buying scenario, the lender invests a lot more money than the borrower does. They do this mainly to protect their investment. Whenever a mortgage loan is used to buy a house, the bank or lender will have the home appraised to find out how much it's worth based on current market conditions. Let's start by covering some of the terminology used throughout this guide.Ī home appraisal is an expert assessment of a residential property designed to determine its current value. It determines whether or not the home meets HUD's minimum property standards.īelow, you will find an overview of FHA appraisal requirements and guidelines for 2024, based on current policy handbooks and other official guidance.It determines the current market value of the house, based on recent sales in the area.The FHA appraisal process serves two purposes. If you use an FHA-insured home loan to buy a house, the property you purchase will have to be appraised by a HUD-approved home appraiser. Note: This page was updated in November of 2023 to include the latest information on FHA appraisal guidelines and requirements for 2024.

Usda home appraisal checklist