An FHA appraisal stays with a property for 180 days from the date the appraiser inspects the home, and it stays attached to that property through its FHA case number rather than to you as the borrower. If your loan hasn’t closed within that window, your lender can order an appraisal update that pushes validity out to one year from the original inspection date. After that one-year mark, a new appraisal is the only option.
The 180-Day Standard Window
HUD Handbook 4000.1 sets the initial validity period at 180 days from what HUD calls the appraisal’s “effective date,” meaning the day the appraiser physically inspected the property.1U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook The appraisal has to be valid on the disbursement date, which is the day the lender actually funds the loan. If the 180 days lapse before then, the appraisal can no longer support the loan amount.
The 180-day window is relatively new. It used to be 120 days, with a possible 30-day extension. HUD replaced that structure through Mortgagee Letter 2022-11, effective for all FHA case numbers assigned on or after June 1, 2022.2U.S. Department of Housing and Urban Development. FHA Implements Revised Appraisal Validity Period Guidance The 30-day extension is gone. In its place is the appraisal update process described below.
Other mortgage documents run on their own 120-day clock. The appraisal is separate and follows its own 180-day (or extended) timeline.3U.S. Department of Housing and Urban Development. Mortgagee Letter 2022-11
The Appraisal Is Tied to the Property, Not the Borrower
When a lender opens an FHA loan, it requests a unique case number through HUD’s online system, FHA Connection. That case number is assigned to the property’s physical address.4HUD FHA Connection. Case Number Assignment – Processing Help Once the appraiser completes the inspection and uploads the report, the appraisal is logged under that case number in HUD’s system. Any lender working on a loan for that property under that case number sees the same appraisal. You cannot shop the file to another FHA lender hoping for a higher value while the case number is active.
A case number without an appraisal logged is cancelled automatically after six months of inactivity. Once an appraisal is on file, the case stays active for one year from the appraisal’s effective date.1U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook If the upfront mortgage insurance premium has already been paid to HUD, that automatic cancellation stretches to 18 months of inactivity.5HUD FHA Connection. Pending Case Cancellation Report Business
One limit is worth knowing. An appraisal cannot be moved from one case number to another. If a purchase falls through and the case is cancelled, the next buyer, or the same buyer starting over, needs a fresh case number and a fresh appraisal. It does not matter how recent the previous one is.1U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook
Extending the Appraisal Past 180 Days
If closing won’t happen inside the initial 180 days, your lender can order an appraisal update to push validity up to one year from the original effective date. This is what replaced the old 30-day extension.3U.S. Department of Housing and Urban Development. Mortgagee Letter 2022-11 The update has to be finished before the disbursement date.
The update is documented on Fannie Mae Form 1004D, the Appraisal Update and/or Completion Report. The form actually has two separate uses, and it helps to keep them straight:6Fannie Mae. Appraisal Update and/or Completion Report
- The appraisal update side is where the appraiser performs an exterior inspection from the street, reviews current market data, and determines whether the property has lost value since the original inspection.
- The certification of completion side is where the appraiser verifies that required repairs from the original report were done satisfactorily.
For the update to be usable, HUD requires all of the following:3U.S. Department of Housing and Urban Development. Mortgagee Letter 2022-11
- The appraiser confirms the property has not declined in value since the original inspection.
- The exterior inspection reveals no significant damage or visible changes to the improvements.
- The update is performed by an FHA-approved appraiser in good standing. If the original appraiser is not available, a substitute may be used, but they must state that they agree with the original report’s analysis and conclusions.
- The update is performed within one year of the original appraisal’s effective date.
If the appraiser finds a value drop or a new deficiency, the update cannot be used and a full new appraisal is required. And once you pass the one-year mark from the original effective date, no further updates are available. At that point the only path forward is a new case number and a new appraisal.
Switching Lenders Without Losing the Appraisal
Because the case number lives with the property, you can move to a different FHA lender without paying for a new appraisal. Your original lender must transfer the case number, and the appraisal that goes with it, to the new lender through FHA Connection’s Case Transfer function.7U.S. Department of Housing and Urban Development. Chapter 4 – Cancelling Cases and Transferring Case Numbers The original lender also has to provide the new lender with a copy of the appraisal report itself.
The original lender cannot charge you for the transfer. It may negotiate a fee with the new lender for additional processing documents, but that cost cannot be passed to the borrower.8U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook The transfer happens at your request, and the original lender cannot refuse to release the case number. If the previous loan had been formally rejected, the original lender must complete the rejection process in FHA Connection before transferring.7U.S. Department of Housing and Urban Development. Chapter 4 – Cancelling Cases and Transferring Case Numbers
Once the case is in the new lender’s hands, its underwriting team reviews the existing appraisal for FHA compliance and moves the loan forward on the same 180-day (or extended) clock. The clock does not reset with the lender change.
When Appraisal Validity Doesn’t Apply: Streamline Refinances
If you already hold an FHA loan and refinance through the FHA Streamline program, a new appraisal is generally not required.9U.S. Department of Housing and Urban Development. Section C – Streamline Refinances Overview The program is designed to cut paperwork and cost, so HUD waives the appraisal in most cases. Even if a lender chooses to order one, FHA allows the value to be disregarded, so a low number will not block the refinance. Investment properties that you do not occupy as your primary residence can only be streamline-refinanced without an appraisal at all.10U.S. Department of Housing and Urban Development. Streamline Refinance Your Mortgage
A streamline still needs a new FHA case number for the refinance loan. But because no appraisal is required, the validity period of any earlier appraisal on the property is beside the point for that transaction.