FHA just made one of the most practical updates we’ve seen in years — simplifying the appraisal process, eliminating outdated rules, saving buyers time and money, and aligning more closely with conventional lending standards.
If you're a Realtor, investor, or first-time buyer, this matters.
Here's why.
🚀 What Changed (Effective Immediately)
On June 27, 2025, HUD issued Mortgagee Letter 2025-18, which officially removed several outdated appraisal protocols. These changes are now part of the HUD Handbook 4000.1 and apply to FHA forward mortgages and reverse mortgages(HECM).
Here’s what’s been cut:
No More Economic Life ReportingAppraisers no longer have to determine the remaining economic life of a property — a step that historically caused issues in older neighborhoods and unfairly shortened eligible loan terms.
Fewer Required Photos FHA trimmed down excessive photography rules. Appraisers are no longer required to include attic or crawl space photos in every report — unless there’s an issue or lender overlay. However, basement photos are still required.
Less Burden in Changing Markets Appraisers are no longer required to include additional comps or pending sales in volatile markets. This reduces unnecessary documentation and helps streamline closings.
Section 223(e) Simplified Special appraisal rules for homes in "older declining areas"(Section 223(e)) have been removed, modernizing access in urban cores.
🧠 What This Means for Realtors
Faster Appraisals = Faster ClosingsWith fewer hoops to jump through, turnaround times for FHA appraisals should improve.
Simplified Appraisals on Older HomesNo more roadblocks due to outdated “economic life” issues in charming—but aging—neighborhoods.
No More Crawlspace/Attic Photo MandatesAppraisers are no longer required to photograph these areas — unless there’s an observed issue or lender overlay.
Lower Appraisal CostsLess documentation means potential savings for buyers.
💡 What Buyers Should Know
FHA loans just became more efficient and accessible — especially for buyers looking at older homes or unique properties.You’ll still get a solid appraisal, but with less red tape, it’s easier to get across the finish line.
If you’re tight on cash or need flexible credit guidelines, FHA is now even more buyer-friendly.
Heads up for Realtors:- FHA still requires basement photos, but attic and crawl space photos are no longer mandatory unless there's visible damage or a lender request. This reduces hassle but doesn’t eliminate inspections entirely if issues are flagged.
Final ThoughtsThis move by FHA is a step in the right direction. It brings government-backed lending in line with current industry practices while still protecting buyers.
For Realtors, it means fewer headaches. For buyers, it means more opportunities.
Have questions or working on a deal right now?Let’s talk — I’ll help you make the most of these changes and give your clients a smart edge and be sure to ask about our current incentives to cover appraisal costs with your referred buyers.
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Bill Black | Sr. Mortgage Broker
360-910-3290
Lending in WA & OR NMLS #49242
bill@billcblack.com
