What to Know About USDA Home Inspections (And Why You Should Still Get One)
Are home inspections required for USDA loans?
The short answer is no. However, though USDA loans only officially require an appraisal — not an inspection — borrowers should still consider having a certified inspector check the property they intend to buy.
It’s easy to confuse appraisal vs inspection. Though both involve a third-party assessment of a property, they have different end goals. An appraisal generally assesses a home’s fair market value, while a home inspection evaluates a property’s safety and condition.
Read on to learn why buyers should consider getting an inspection even though USDA lenders don’t require one.
A home inspection helps buyers better understand the property they’re planning to purchase and provides options if the home has problems or defects.
Getting a USDA home inspection provides a buyer with both short- and long-term benefits. A USDA home inspection can:
Since home inspections aren’t technically required, buyers don’t have to adhere to any specific USDA inspection requirements. However, the inspector should follow state regulations.
Inspectors usually deliver a written report with findings and recommendations within a few days. This report helps buyers make informed decisions and negotiate repairs, if needed.
What is a USDA appraisal? A USDA appraisal is a written report or document that assesses the total value of a property. It helps a lender determine how much money to lend relative to the home’s fair market value.
After a lender accepts an application on a USDA eligible property, a qualified, independent, and objective appraiser will visit the property in person to ensure it meets a broad set of Minimum Property Requirements. These include (but are not limited to) checking that the home:
It’s important to note that some parts of a USDA appraisal may sound a lot like an inspection. USDA-approved appraisers check structural soundness and also check major appliances and systems, such as the location of wells and septic systems. However, appraisals are not as detailed or in depth as inspections.
The bottom line: Appraisals and inspections are not the same. Appraisals are required for a USDA loan, and while home inspections aren’t mandatory, buyers should almost always invest in one.
Let’s take a look at the differences in the chart below:
| Feature | Home Inspection | Appraisal |
|---|---|---|
| Purpose | Identify problems with the home’s condition | Determine the home's fair market value |
| Required for USDA Loan? | No | Yes |
| Ordered by | Buyer | Lender |
| Conducted by | Licensed home inspector | USDA-approved appraiser |
| Focus areas | Structural integrity, systems, safety | Property value, comparable sales, USDA standards |
| Report provided to | Buyer | Lender (and often shared with the buyer |
| Negotiation tool? | Yes – may be used to request repairs | No – used to assess loan amount and eligibility |
| Protects | Buyer | Lender |
Yes, in most cases, you should get a home inspection even though there are no USDA inspection requirements.
Picture this: You elect not to get an inspection, and then you find out later the home you purchased has major foundation issues, including huge cracks in the foundation. You’ll get stuck with the gigantic bill, whereas finding such dwelling issues during an inspection would have required repairs before the loan could close.
Looking for an inspector? Your real estate agent can suggest reputable companies in your area. Home inspection fees can vary based on the property, location of the home, and more. Buyers may want to compare fees and customer reviews from several home inspectors before making a decision.
