If you’re financing a property, your lender will require that an appraisal is completed to determine a fair market value and to ensure the property is in good condition.
USDA loans have a much different process than that of Conventional loans. And given government shutdown events, it’s important to go over the details to better understand this topic.
The appraiser not only determines the fair market value of the property, but they are also ensuring things like Well and Septic are at least 100 feet from the home or that there is access to the home from an all-weather road surface.
USDA Appraisal Process Explained
All approved USDA lenders are required to make sure all appraisals are ordered independently through an appraisal management company and that the report is thorough and accurate.
So what are the guidelines USDA appraisers have to follow when appraising a home for a USDA LOAN?
According to the 3551 USDA Handbook, appraisers must follow these requirements when assessing a USDA eligible property:
• The home must be in a qualifying USDA zone.
• The house must be structurally sound, with a foundation and roof in move in ready condition.
• There must be access to the home from an all-weather road surface.
• The heating and cooling systems must be working at the time of inspection.
• The electrical system and wiring must be in working condition, with no exposed or frayed wiring.
• The plumbing system must be functional and have a functional waste removal system (public sewer or septic are common).
• The well and septic systems drain fields must be at least 100 feet away from the house.
• There can’t be any evidence of termite or wood-boring insect damage.
• The land can’t appraise for more than 30 percent of the home’s value.
• The home cannot have any income producing characteristic such as livestock facilities designed for commercial use, barns, silos, and commercial greenhouses used to generate income.
• It has to meet all state and local guidelines, including building codes.
How Long does a USDA Appraisal Take?
Lenders may extend the validity period of an appraisal with an appraisal update report that will be no greater than 240 days from the effective date of the initial appraisal report at loan closing (150 days for the original appraisal plus 90 days for the Appraisal Update Report).
Are USDA and FHA Appraisals the Same?
USDA requires, and has for quite a while now, that their appraisals meet FHA guidelines. And their appraisers must be on the FHA approved list. This is not because they sell their loans, but they want the properties to meet the same health, safety and condition guidelines as FHA does.
Can You Transfer a USDA Appraisal?
An appraisal ordered by another lender for the applicant can be transferred to the lender who will complete the purchase transaction. The initial lender must agree to the transfer of the report.
If you’re searching for USDA Loans and wish to find out if you’re Pre-Approved then click this link Here and we will be more than happy to help you!