FHA loans are a great option for first-time homebuyers or anyone looking to purchase a home with a low down payment. However, there are some things that can make your FHA loan appraisal go south. Here are 25 FHA red flags that you should be aware of:

1. Utilites

   1. All utilities and major appliances must be turned on and operational at the time of the inspection, including but not limited to furnaces, baseboard heaters, boilers, water main, electric, and water heater.

2. Cabinetry

   1. All cabinetry and countertops should be in decent, operable condition. Any broken hardware, doors, drawers, or glides will be noted in the inspection report to the lender.
   2. Child-safety locks on cabinets should be noted and addressed. Some cabinets may require magnets, tools, etc. to unlock.

3. Plumbing

   1. The appraiser will be looking for anything that might indicate there’s a problem with the pipes in your house. This includes leaky faucets and toilets, backed-up drains due to corrosion or clogged waste systems (like you may have had before), hot water pressure issues when taking baths/showers, etc., as well an adequate amount of fresh drinking supply available at all times – even if it seems like more than one person can use their bathtub simultaneously

4. Water heaters:

   1. The pressure and temperature relief valve is an essential part of your Water Heater, so make sure it’s installed correctly. It should be close enough to 6″ from the floor for safety reasons if you want a constant stream of hot water output without having any escaping steam

5. Decks

   1. Decks should be safe and sound. They must not have boards that are rotten, broken or missing; there shouldn’t also be any signs of wear on the steps either-you can’t expect people to climb onto your deck if they’re worried about falling over! 

6. Patio doors (and any door over 36” off ground):

   1. must have a guardrail or be secured so it will not open more than 4”

7. Defective roofing materials will be reported.

   1. Any sign of leaking and excessive wear (missing, cupping or curling shingles; patching, etc.) will
      be noted. A minimum 2-year life expectancy is required. If in doubt, an inspection may be
      required.

   2. NOTE: If the roof is not observable (snow cover, flat roof, etc.), the appraiser must note in the

      report and the DE underwriter may condition the report for a third-party inspection.

8. Attic: the appraiser MUST observe the attic.

   1. Have entry to any scuttles or attic stairways cleared, open and ready for inspection. The
      appraiser will not use tools to remove bolts/screws or break a new construction seals; nor
      should the appraiser have to move items to access the attic (shelving or personal items in
      closets/pantrys, etc).
   2. Note where the attic access is located and the height of the access prior to scheduling the
      appraisal inspection. (Appraisers  will carry a ladder allowing for access to an 8’ ceiling only – verify needs
      with each individual appraiser at the time of scheduling)
   3. Accesses with an atypical entry (example: Eid-co exteriors) may require a 3rd party inspection.

These are all important questions that need to be considered when appraising a home with an unfinished basement – 25 FHA red flags for Federal Housing Authority loan appraisals

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration. FHA home loans require lower minimum credit scores and down payments than many conventional loans, which makes them especially popular with first-time homebuyers. In fact, according to FHA’s 2021 Annual Report, more than 84.6 percent of all FHA loan originations were for borrowers purchasing their first home.

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