What type of properties typically require an FHA appraisal?

FHA appraisals are specifically designed for residential properties that are involved in FHA-insured loans. The Federal Housing Administration (FHA) provides insurance on loans made by approved lenders to borrowers with low to moderate incomes. This insurance protects lenders against losses that may occur if borrowers default on their loans. As a condition for this insurance, FHA requires that an appraisal be conducted to ensure the property meets certain minimum safety and habitability standards.

Residential properties are subject to these appraisals to assess their market value and condition. The appraisal process also evaluates whether the property complies with FHA guidelines, including health and safety standards. This ensures that the homes are suitable for living and that the investment for both the borrower and the lender is sound.

Other types of properties, such as commercial properties, vacant land, and luxury estates, do not generally require FHA appraisals since they fall outside the scope of FHA-insured loans and the associated appraisal requirements. Thus, the correct answer highlights the specific context in which FHA appraisals are utilized, reinforcing the focus on residential properties connected to FHA loans.