When it comes to buying a home with a mortgage loan, both USDA and FHA loans are popular options for homebuyers. One important aspect to consider is the appraisal process for each type of loan. How is USDA appraisal different from FHA? Let’s explore the key differences between the two.
How is USDA appraisal different from FHA?
USDA appraisal:
– USDA loans require a property appraisal to determine the property’s market value and ensure it meets USDA property eligibility requirements.
– The appraisal must be performed by a certified appraiser who is approved by the USDA.
FHA appraisal:
– FHA loans also require an appraisal to assess the property’s value and ensure it meets FHA standards.
– The appraisal must be conducted by an FHA-approved appraiser who follows specific guidelines outlined by the FHA.
What are some key similarities between USDA and FHA appraisals?
Both USDA and FHA appraisals assess the property’s value, condition, and compliance with program-specific requirements.
Can a property fail a USDA or FHA appraisal?
Yes, a property can fail an appraisal if it does not meet the minimum requirements set forth by the USDA or FHA.
Can a borrower choose their own appraiser for a USDA or FHA loan?
No, borrowers cannot choose their own appraiser for USDA or FHA loans. The lender will typically select and arrange for an appraiser.
Who pays for the appraisal for a USDA or FHA loan?
The borrower is responsible for paying for the appraisal for both USDA and FHA loans as part of the closing costs.
What factors are considered during a USDA or FHA appraisal?
Appraisals for both USDA and FHA loans consider factors such as the property’s location, size, condition, and overall market value.
What happens if the property appraises for less than the purchase price?
If the property appraises for less than the purchase price, the lender may require the borrower to make up the difference in cash or renegotiate the purchase price with the seller.
Are there specific requirements for the condition of the property in a USDA or FHA appraisal?
Yes, both USDA and FHA appraisals have specific requirements for the property’s condition, including issues such as safety hazards, structural integrity, and functionality of key systems.
How long is a USDA or FHA appraisal valid for?
A USDA appraisal is typically valid for 120 days, while an FHA appraisal is valid for 120 days as well.
Can a borrower appeal the results of a USDA or FHA appraisal?
Yes, borrowers can appeal the results of a USDA or FHA appraisal if they believe there were errors or discrepancies in the valuation process.
What happens if the property does not meet USDA or FHA appraisal requirements?
If the property does not meet USDA or FHA appraisal requirements, the lender may require repairs to be completed before closing or the loan approval may be denied.
Are there any exceptions to the USDA or FHA appraisal requirements?
In some cases, exceptions may be granted for certain appraisal requirements based on specific circumstances, but these exceptions are rare and must be approved by the lender.
Can a borrower request a second appraisal for a USDA or FHA loan?
Yes, borrowers can request a second appraisal if they believe the initial appraisal was inaccurate or unfair, but the lender has the discretion to approve or deny the request.
In conclusion, the appraisal process for USDA and FHA loans plays a crucial role in determining the property’s value and ensuring it meets program-specific requirements. Understanding the key differences between USDA and FHA appraisals can help borrowers navigate the homebuying process with confidence.