🤔 What's New with FHA Appraisals in 2025? Here's What Every Buyer and Seller Should Know
What’s changed with FHA appraisals in 2025—and why should you care?
Big news for anyone using FHA financing in Virginia Beach or across Hampton Roads: Mortgagee Letter 2025-18 just introduced major updates to FHA appraisal guidelines. HUD has officially rolled back several outdated and costly requirements—streamlining the process and aligning it more closely with conventional standards.
🏡 Whether you're buying your first home in Virginia Beach or selling a property in Chesapeake, these changes could mean faster appraisals, fewer delays, and potentially lower costs.
Understanding how these updates impact your transaction can help you plan smarter and move with confidence in today’s evolving market.
Why now? Many of the rescinded requirements were originally created for a different era—before advances in data modeling, property tech, and appraisal standards. As HUD explained, the old rules no longer match the broader lending industry and have become unnecessarily burdensome. These updates are part of a wider federal effort to modernize policy, reduce costs, and improve access to homeownership..
Click here to read the full Mortgagee Letter 2025-18 from HUD.
📊 Key Takeaways
- Outdated FHA appraisal requirements have been eliminated effective immediately.
- Less paperwork and fewer photo requirements mean lower appraisal costs.
- Buyers and sellers will benefit from faster closing timelines.
- These changes align FHA more closely with conventional loan standards.
- The updates apply to both FHA forward mortgages and reverse mortgages (HECM).
🏛️ Why Do Appraisals Matter in Real Estate?
Appraisals play a critical role in protecting both the buyer and the lender. They provide an independent opinion of value to ensure the home isn’t overpriced. But appraisals can come in at, above, or below the contract price:
🏠 Appraisal Scenarios & What Happens Next
Here’s how different appraisal outcomes can impact your transaction:
| Scenario | What Happens |
|---|---|
| Appraisal matches contract price | Loan proceeds and terms stay the same. All parties move forward. |
| Appraisal comes in over contract price | Great news for the buyer—they’re buying with instant equity. Note: when the value comes in over the sales price, the amount is not typically shared with the seller. |
| Appraisal comes in under contract price | The loan is based on the appraised value. Buyer can renegotiate, pay the difference, or walk away. |
If the appraisal comes in low, the buyer isn’t required to proceed with the purchase. That’s when negotiations begin. As your agent, I step in to advocate for a price adjustment based on the appraised value. Most sellers are open to this, since the next buyer’s appraisal will likely reflect the same result.
🚀 Major FHA Appraisal Changes You Need to Know
HUD eliminated several long-standing requirements that were driving up time and cost. Here are the biggest updates:
📋 Appraisal Rule Changes: What’s Been Updated
Recent updates have streamlined the appraisal process, reducing burdens and modernizing requirements:
📋 Appraisal Rule Changes: What’s Been Updated
Recent updates have streamlined the appraisal process, reducing burdens and modernizing requirements:
| Old Requirement | What's Changed |
|---|---|
| Appraiser had to estimate "remaining economic life" | This requirement is gone. Underwriters no longer need to use it for loan decisions. |
| Redundant photo requirements | Appraisers no longer have to take subject photos from opposite angles to show all sides. Photos of the attic, crawl space, and common areas in 2–4-unit properties and condos are no longer mandatory. Most notably, appraisers are no longer required to include their own original photos of comparable sales—MLS photos alone are now sufficient. |
| Additional comps in changing markets | This extra burden has been lifted, simplifying appraisals in volatile markets. |
| Extra reporting for 223(e) Mortgages | No longer required. FHA is removing special appraisal protocols for properties in older, urban areas. |
In short, HUD is acknowledging that appraisal technology and practices have evolved—and FHA buyers shouldn’t be stuck with outdated processes.
🛍️ What This Means for Buyers and Sellers
For buyers, these updates could mean lower appraisal fees, less delay, and fewer surprises. Especially in competitive markets, streamlining the process can make your offer more attractive.
For sellers, faster closings and fewer hurdles can lead to smoother transactions—especially when dealing with FHA-financed buyers.
💡 Keep in mind: While HUD has simplified FHA appraisal rules, individual lenders in Hampton Roads may still follow older requirements. If you're applying for a loan, ask your local loan officer what their appraisal standards include so you can plan accordingly.
🤔 FHA Appraisal Changes: Frequently Asked Questions
- Are FHA appraisals still stricter than conventional ones?
No. These new updates bring FHA much closer to conventional appraisal norms. - How long does an FHA appraisal usually take?
Typically 5–10 business days, but it depends on the market and property. The recent changes may speed up turnaround times by reducing documentation and photo requirements. - Will this affect home values?
No. Appraisers still determine value using market data and industry standards. The updates only affect how appraisals are documented, not how values are determined. - Are these changes permanent?
Yes, they are effective immediately and will be incorporated into the FHA Handbook 4000.1 as part of a broader modernization effort by HUD. - Who pays for appraisal-required repairs?
In the Hampton Roads real estate market, our contracts include a negotiable CAP—typically a percentage of the purchase price (e.g., 1%)—that covers certain costs the seller is required to pay, including appraisal-required repairs. If the total exceeds the CAP, the buyer and seller must negotiate who covers the difference.
🌟 Final Thoughts: Let’s Talk Strategy
If you are interested in buying or selling a home and want up to date information on the Hampton Roads real estate market and want to know how to best position yourself whether buying or selling, book a discovery call with me . Let's plan your next move with confidence!
🏡 Ready to Level Up Your Real Estate Strategy?
Whether you're buying, selling, or just exploring your options in Virginia Beach or anywhere in the S. Hampton Roads area, let's make your next move strategic, confident, and informed. I specialize in turning city plans, incentives, and market trends into actionable guidance tailored to your goals.
📅 Schedule Your Discovery CallThanks for Reading,
Liz Schuyler is a top Virginia Beach REALTOR® with RE/MAX Allegiance, licensed since 2001 and trusted across Hampton Roads. With 350+ homes sold, she helps clients Sell, Move, and Invest with confidence and strategy.
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