How Long Are FHA Appraisals Good For?

Phoenix FHA Mortgage Lender

An FHA appraisal is valid and must be used for a period of 120 days.  FHA measures the appraisal validity period from the day that the FHA appraiser inspects the property through the day that the FHA loan being used to buy the property that was appraised is closed.  FHA does technically allow for an appraisal to be extended up to 30 days beyond the 120 day validity period if that appraisal has not been updated per FHA update policy.   More important however is the fact that in this current market, no lender is allowing the 30 day extension even though FHA allows it.  Bottom line in this market is that non updated FHA appraisal that has not been updated is good for 120 days.

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How long does an Appraisal stick with a property?

FHA appraisals stay with a property for the entire 120 day appraisal validity period.  This means that if an FHA buyer has a contract on a home and they have an FHA appraisal completed on that home, that buyers FHA appraisal will stay with that property and must be used by any other FHA buyer that may come along to purchase that property within the original appraisals validity period.

An example of how this works:

FHA buyer number 1 executes a contract on a property and orders an FHA appraisal.  The FHA appraiser inspects the property on Jan 1 and completes the report a week later.  Shortly after the appraisal is completed the buyer cancels his purchase contract.  One week later a new buyer (we will call them buyer number 2) comes along and executes a purchase contract on that exact same home and buyer number 2 is also using an FHA loan to finance their purchase.   Buyer number 2 is set to close on Feb 15th.  Since Feb 15th is within 120 days of the date the FHA appraiser inspected the property for buyer number 1’s appraisal order buyer number 2 will need to use buyer number 1’s FHA appraisal (and its appraised value) and cannot order a new appraisal.

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If buyer number 2 was not closing within 120 days of buyer number 1’s appraisers inspection than buyer number 2 would have to order a brand new FHA appraisal.  Under FHA guidelines buyer number 2 and their lender technically have the option to request to extend the appraisal validity period from 120 days to 150 days so that buyer number 2 could still use the original appraisal beyond the 120 validity period if they wanted to.  However, under current market conditions no lender is allowing appraisal validity periods to be extended beyond 120 days so the FHA guideline while still open to extensions is irrelevant because lenders have essentially over ruled it with their own layered guideline prohibiting any extensions.

Learn more on HUD’s site – 3 announcements regarding FHA appraisal validity periods.

Please let me know if you have any questions about anything else related to FHA financing.

By Jeremy House

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