What are the Appraisal Requirements for 203b Loans?

FHA 203(b) Appraisal Requirements: What You Need to Know

Before using an FHA 203(b) loan to purchase a home, you’ll need to order an appraisal before the loan can close. The appraisal is essential for a variety of reasons, including calculating the loan-to-value (LTV) ratio of the loan, as well as to ensure that the home is not substantially overpriced.

FHA Appraisal Costs

In general, the buyer will pay for the appraisal, which usually costs between $300 and $500. Some of the most important factors that can affect the cost of an appraisal include:

  • Size of home (in square feet)

  • Property type

  • Amount of land

  • Property location

  • Extent of any repairs or damage

As you might imagine, larger homes on larger parcels of land, and those that may have extensive damage or repairs will usually cost more to appraise. In contrast, smaller, newer, and undamaged homes will typically cost less.

The FHA Appraisal Process

During the appraisal process, a property appraiser will inspect the property to look at a variety of factors, including:

  • Quality of interior and exterior structure

  • Inspect appliances, plumbing, and fixtures

  • Inspect heating and cooling systems

  • The condition of walls and ceilings

  • The condition of the landscaping

  • Any evidence of lead-based paint

In addition, appraisers will also photograph the front, back, and sides of a home, including any upgrades or renovations that could increase the home’s value.

FHA/HUD Minimum Property Standards

In order to qualify for an FHA insured loan, HUD requires that property appraisers also check for HUD’s basic safety and livability standards, which include:

  • Safe and public access to the home

  • Safe drinking water

  • No exposed electric wiring

  • No undue hazards inside the home

  • Full, undamaged exterior walls

  • Adequate drainage

  • Good quality construction

  • No lead-based paints

  • Gas, water, sewage, and electric utilities available

  • Crawl spaces with natural ventilation


If you’d like to learn more, simply fill out the form below and a friendly FHA home loan specialist will get in touch!