3 S's of FHA Appraisals

As appraisers we are asked a lot about FHA appraisals. Although I am competent enough to answer most questions I often refer them to the HUD website. If you spend some time on their website you can find an overwhelming amount of great information.

FHA guidelines are packed into a few documents, one of which is the 4150.2. A list of good appraisal questions and answers are listed at FHA QUESTIONS.

FHA guidelines require that a house meet basic levels of livability before it can be approved for a FHA backed loan. When an appraiser is at a property they are required to make certain observations. While this is not to be construed as a home inspection the appraiser does have a checklist of sorts to go through. These items from the 4105.2 and associates documents focus on these and are typically reported on a MPR report

(minimum property repair). A way to conduct your own preliminary test as to whether a home will pass an FHA appraisal inspection is to use the three S’s: Safety, Security, and Soundness.

Safety – Perhaps the most common reason a house fails this test is that it was both built prior to 1978 and has some amount of peeling paint. Lead has been found to be harmful if swallowed by pets or humans. Other safety issues come in the form of site hazards, flight paths of runway zones, high powered lines having a fall distance near the home, undesirable topography, outdated well or septic systems, abandoned gas wells, industrial areas, and flood zones. Safety problems within the improvement itself can be seen in areas where there are steps but no handrail, broken glass, exposed outlets or wires, or outdated utilities.

Ask yourself if the home would be safe enough for your family?

Security – This ought to be a no-brainer, but often a house can be entered via a back door with no lock, a broken door, or a broken window. Sometimes new construction or recent improvement have a section of a wall missing. Whatever the case, a home must be able to be sealed off and locked in order to be called


Lock the home and pretend to be a burglar. If you can get in (without the use of a crowbar or tools), then the home is not secure.

Soundness – This is more difficult to detect as faulty construction is sometimes well covered. Leaks, foundation cracks, termite tunnels and holes, a worn roof, and water in the basement or attic often reveal themselves with less than a little bit of looking around. Obvious physical deficiencies are going to be flagged by the appraiser.

That is it in a nutshell and its most simplistic terms. Sure, there are broader problems a home could suffer

(like proximity to industry, noise, etc.), but these are things that are far less likely. Make sure the home is safe, secure, and sound, then you are unlikely to have any issues with the FHA portion of the appraisal.

If you have any questions on appraisals and/or would like to get an appraisal completed do not hesitate to Sun Point Appraisals, Inc at 480-595-0188.