If a borrower decides that an FHA mortgage loan is right for them, there is a process that the FHA requires the borrower and the property to go through. The borrower must have a credit check, and the FHA requires the property to have an appraisal. Obviously, as the FHA insures the loan for the lender, if the borrower can no longer make mortgage payments, the FHA will get the house. That being said, the most important function of the required FHA appraisal is that it is performed to protect the FHA against a house in bad condition and therefore lowered value.
Many homeowners who purchased their homes with FHA aid believe that the required appraisal constitutes some sort of warranty as to the value or condition of the appraised property. The truth is that if a borrower discovers some sort of defect with their FHA mortgage loan property, the FHA will do nothing to repair it. It is the borrower's responsibility to order a home inspection to find out if the property has any major defects or is in bad condition. Just remember the FHA is indeed a mortgage insurer, but this fact does not protect you from problems in the house.