Home buyers tend to have a lot of questions about California FHA loan inspection requirements. It’s also a common source of confusion, particularly among first-time buyers.
The truth is that the Department of Housing and Urban Development (HUD) doesn’t require a home inspection for California FHA loans. But they do require a property appraisal to be conducted, and it has some inspection requirements built into it.
Here’s what you need to know about this process.
California FHA Home Inspection Requirements
Federal Housing Administration (FHA) home loans are originated by mortgage lenders in the private sector and insured by the federal government. As a result of this government insurance, these loans must meet certain guidelines and requirements that are imposed by HUD.
Here is a quick overview of California FHA home appraisal and inspection requirements:
- HUD does not require FHA borrowers to have a full and comprehensive home inspection. But they strongly encourage it. In fact, home buyers who use this program typically receive a HUD disclosure that stresses the importance of having the home inspected. But a full inspection is generally not required for California FHA loans.
- HUD does require a full property appraisal to be conducted for all FHA purchase loans. The primary purpose of the appraisal is to determine the current market value and resale potential of the home. Mortgage companies and FHA insurers want to make sure that the home is worth the amount the borrower is paying for it.
- California FHA home appraisals do have some basic property inspection components built in. The appraiser does not conduct a full home inspection like a regular inspector would. But he will evaluate the overall condition of the property, as required by HUD.
- Among other things, the FHA appraiser will check for encroachments. This is when one property has structures that intrude into the boundary lines of another property. Encroachment issues can be a problem.
- During the California FHA appraisal / inspection, the appraiser will also observe the electrical system for proper function and safety. Again, it probably won’t be as in-depth as what a regular home inspector would do. But the appraiser will look for proper function and safety of all of electrical systems.
- Similarly, the appraiser will evaluate the home’s plumbing system to make sure it works properly and that there are no obvious leaks.
- If there is a permanently installed furnace for heating system, the FHA appraiser will review it for functionality.
Health and Safety of the Homeowner
When it comes to California FHA inspection requirements, HUD is primarily concerned with the health and safety of the occupant, and the resale potential of the property.
If there’s an issue with the home that could be a potential health hazard to the occupant, the FHA appraiser will likely flag it for correction. The same goes for issues that could affect resale value, such as serious damage to the foundation or roof.
Bottom line: If the house being purchased is structurally sound and presents no health hazards to the occupant, it will likely clear the appraisal process with no issues.
Where to learn more: If you would like to learn more about California FHA inspection and appraisal requirements, please refer to HUD Handbook 4000.1, which is available online.
Need an FHA loan? If you have questions about qualifying for an FHA home loan in California, please contact our staff. Our in-house experts can answer any questions you have about this mortgage program.