USDA Loan Inspection Requirements
Many buyers wonder whether a home inspection is part of the USDA loan process. The short answer is no, USDA loans require an appraisal, not an inspection. That said, borrowers should still consider having a certified inspector evaluate the property they intend to buy.
It’s easy to confuse appraisal vs inspection. Both involve a third-party assessment of a property, but with 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 an inspection even though USDA lenders don’t require it.
A home inspection helps buyers better understand the property they plan 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:
Since home inspections aren’t technically required, buyers don’t need to follow 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.
Since inspections aren’t required, buyers do not need to worry about a pass/fail standard. If you voluntarily hire a home inspector, their findings are for your benefit as a buyer, not the lender's. There's no USDA-set threshold an inspection must meet.
That said, if the appraisal turns up safety or structural concerns, those may need to be resolved before the loan can close.
While home inspections aren't required for USDA loans, a qualified inspector typically evaluates the following areas. Use this checklist as a guide when reviewing your inspection report.
Also consider requesting a well water quality test and a full septic inspection, as these are often not included in a standard inspection fee.
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 visits 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 is that appraisals and inspections are not the same. Appraisals are required for a USDA loan, and while home inspections aren’t mandatory, buyers should strongly consider investing in one.
Let’s take a look at the differences in the chart below:
| Home Inspection | Appraisal | |
|---|---|---|
| Purpose | Identify problems with the home’s condition | Determine the home's fair market value |
| Required for a 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 (often shared with the buyer) |
| Protects | Buyer | Lender |
Yes, in most cases, you should get a home inspection even though there are no USDA inspection requirements.
For example, if you skip an inspection and later discover the home has major foundation issues, the repair costs fall entirely on you. Finding structural problems during an inspection, on the other hand, gives you the opportunity to negotiate repairs or walk away before you're committed. That's a protection worth paying for.
Looking for an inspector? Your real estate agent can suggest reputable companies in your area. Home inspection fees vary based on the property, location, and other factors. Buyers may want to compare fees and customer reviews from several home inspectors before making a decision.
Ready to take the next step? Check your USDA loan eligibility or learn more about how the USDA loan process works with a USDA-approved lender.
