HUD Announces Changes to FHA Appraisal Requirements  

On June 27, 2025, HUD issued Mortgagee Letter 2025-18, “Recission of Outdated and Costly FHA Appraisal Protocols.”   

There are four significant appraisal-related revisions to Section II. D. of the Handbook.  

1. Subject and comparable photograph requirements have been revised. The wording requiring appraisers to take subject photos “at opposite angles to show all sides” was removed. The requirement to provide photos of the attic and crawl space was removed, as were other requirements, such as photos of the common areas of 2–4-unit properties and common areas and shared amenities of condominium properties. Most significantly, the requirement for original comparable photos was deleted. Previously, the Handbook stated, “Multiple Listing Service (MLS) photographs are acceptable to exhibit comparable condition at the time of sale. However, appraisers must include their own photographs as well, to document compliance.” Those two sentences have been removed from the Handbook.  

2. The appraiser is no longer required to state the remaining economic life of the dwelling in the appraisal report.  

3. In situations in which the subject is located in an increasing or decreasing market, the appraiser is no longer required to include an absorption analysis, a minimum of two sales that closed within 90 days of the effective date, and two active listings or pending sales. Also, the appraiser is no longer required to include a comment in the Neighborhood section of the report regarding the continuance of the neighborhood trends.  

4. For Section 223(e) mortgages, the appraiser is no longer required to include an estimate of remaining physical life for the subject property improvements.  

It is important to note that the originating lender is the client, not HUD/FHA, and as such, the lender may still require some or all the above items.  

For example, a lender may still require an appraiser to include an estimate of remaining economic life or require an appraiser to include active listings or pending sales in an appraisal report, even though HUD/FHA does not. That is the lender’s prerogative. Appraisers are advised to proactively communicate with their lender/clients to determine whether compliance with these “outdated” FHA requirements is still necessary.   

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