Conventional VS FHA Appraisals
Appraisals: Conventional vs. FHA
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There are many who believe that appraisals conducted for conventional loan applications are very different compared to appraisals conducted for FHA loan applications. The truth is that there are more similarities than differences.
Both types of appraisals focus on marketability of the home, accuracy of the valuation, identifying proper comparables, and making sure the home meets safety and health guidelines. The main difference between the appraisal types is the level of inspection. Since an FHA loan comes with the protection of federal insurance, FHA appraisals require the appraiser to conduct a more detailed inspection of the home. For instance, when conducting an FHA appraisal, the appraiser should inspect any crawl spaces as well as attics (even if it’s a scuttle attic), confirm appliances are in working order, turn on and off all faucets, confirm the heat and air conditioning are functioning properly, open and close all windows, and more. These items are not necessarily required when conducting a conventional loan appraisal.
There is also the misconception that an FHA appraisal can only be used for an FHA loan. Actually, an FHA conducted appraisal can be used for a conventional loan (which is why, if a mortgage applicant is considering both gov’t-backed program and a convention program, it is recommend to have the appraisal conducted as an FHA appraisal allowing it to be used for either program). A conventional appraisal can be modified to an FHA appraisal only after a re-inspection which carries an added cost.