FHA appraisal validity

The validity of the appraisal determines the term of the lender’s Conditional Commitment or Direct Endorsement approval. The underwriter’s approval of the property, often issued on form HUD-92800.5B, is valid for the greater of 90 days or the remaining life of the appraisal. This means that as long as the appraisal report remains valid (within its 180-day window or extended via an update), the underwriter’s specific conditions and approval of the property collateral remain in effect. Once the appraisal expires, the Conditional Commitment based upon it also expires.

Yes, an FHA appraisal is valid for the property and can be used for a different borrower, provided the original FHA case number is transferred and remains active. If a new borrower applies for a loan on the same property with a new lender, the new lender must enter the new borrower’s information into the FHA Connection system. The new lender is required to collect the appraisal fee from the new borrower and refund the fee to the original borrower. The appraisal remains valid for its standard 180-day term.

If the 180-day validity period expires and no Appraisal Update has been obtained, the appraisal is no longer valid for FHA insurance endorsement. In this scenario, the lender must order a new appraisal to proceed with the transaction. FHA guidelines dictate that documents used in underwriting, including the appraisal, must be valid at the disbursement date. Therefore, the loan cannot close with an expired appraisal. Lenders typically track these dates to ensure an update is ordered before expiration to avoid the higher cost and time associated with a full new appraisal.

An Appraisal Update is a report used to extend the validity of an existing appraisal. To perform this, an appraiser inspects the exterior of the property and reviews current market data to ensure the value has not declined since the original report. If the appraiser agrees the value is sustained, the validity of the original appraisal is extended for one year from the original effective date. If the appraiser determines the value has declined or cannot concur with the original value, the update cannot be used, and a new appraisal is required.

In areas designated as Presidentially-Declared Major Disaster Areas (PDMDAs), the validity period of an appraisal may be extended. If the mortgage has not closed prior to the disaster incident period, the appraisal validity is extended from the standard 180 days to a maximum of one year from the effective date of the original appraisal. This extension usually requires a damage inspection report to confirm the property’s condition has not been compromised. However, if the appraisal’s effective date is more than one year old at the time of closing, a completely new appraisal is required.

No, the appraisal does not expire simply because you switch lenders. The appraisal is linked to the property and the FHA case number, not the specific lender. If a borrower switches lenders, the original lender must transfer the appraisal to the new lender within five business days upon the borrower’s request. The new lender must use the existing appraisal if it is still within its 180-day validity period and cannot request a new appraisal or a readdress of the report solely because they have taken over the loan application.

No, you generally cannot reuse an appraisal for a new FHA case number assignment, even if the report is less than 180 days old. FHA guidelines mandate that a new appraisal must be ordered for each new case number assignment. The appraisal is tied specifically to the case number assigned to that file. Consequently, if a previous case number is canceled and a new one is assigned for the same property, the lender is prohibited from reusing the appraisal performed under the old or canceled case number, requiring a fresh valuation.

Yes, the validity period of an FHA appraisal can be extended. If the original 180-day period is approaching expiration, the lender may obtain an Appraisal Update, typically reported on the Summary Appraisal Update Report section of Fannie Mae Form 1004D. If the appraiser confirms that the property’s value has not declined, the validity period of the original appraisal report is extended to one year from the original effective date. This option allows the transaction to proceed without the cost of a full new appraisal, provided the update is completed before the disbursement date.

When does the validity period for the appraisal officially begin? The validity period for an FHA appraisal begins on the “effective date” of the report. The effective date is defined as the date the appraiser physically inspected the property, rather than the date the report was signed or the date the lender received it. FHA guidelines rely on the inspection date because it establishes the property’s condition and market value at a specific point in time. Therefore, the 180-day countdown starts strictly from the day the appraiser visited the site to observe the property and analyze the market data.

An FHA appraisal report is generally valid for 180 days. This validity period applies to the specific FHA case number assigned to the property. The 180-day timeframe provides a window for the lender to process the mortgage application, complete underwriting, and close the loan without needing to order a new valuation. If the loan does not close within this six-month period, the appraisal is considered expired. At that point, the lender generally cannot use the original report for endorsement unless an extension is granted through an Appraisal Update or a new appraisal is performed.