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FHA loans · HUD Handbook 4000.1FHA amendatory clause: the exact wording, when it is required and the exceptions

If the FHA borrower does not receive form HUD-92800.5B – the Direct Endorsement statement of appraised value – before signing the sales contract, the contract must be amended before closing to include HUD's amendatory clause, with the actual sales price written in it; any increase in price requires a revised clause (HUD Handbook 4000.1, II.A.1). The clause says the buyer does not have to complete the purchase or lose the earnest money unless the buyer has received a written statement of an appraised value of not less than the stated price – while still allowing the buyer to go ahead regardless of the appraisal. It is not required for HUD REO sales, 203(k) loans, sales by Fannie Mae, Freddie Mac, VA, USDA Rural Housing, other government agencies, lenders selling REO or sellers at foreclosure sales, or when the buyer will not be an owner-occupant. Separately, the buyer, seller and agent must certify that the contract terms are true and that any other agreement is part of or attached to it – unless the contract itself says so and everyone signed it.

The clause HUD requires (verbatim)

"It is expressly agreed that notwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise, unless the purchaser has been given, in accordance with HUD/FHA or VA requirements, a written statement by the Federal Housing Commissioner, Department of Veterans Affairs, or a Direct Endorsement lender setting forth the appraised value of the property of not less than $___________. The purchaser shall have the privilege and option of proceeding with consummation of the contract without regard to the amount of the appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will insure. HUD does not warrant the value or condition of the property. The purchaser should satisfy himself/herself that the price and condition of the property are acceptable." – the blank is the actual sales price.

No amendatory clause needed for

  • HUD REO sales and FHA 203(k) loans.
  • Sales by Fannie Mae, Freddie Mac, VA, USDA Rural Housing Services or other federal, state and local government agencies.
  • A lender disposing of REO, or a seller at a foreclosure sale.
  • Sales where the borrower will not be an owner-occupant, such as sales to nonprofit agencies.

What the TC checks

  • Whether the state's FHA/VA addendum already contains the clause – and that the price in it matches the contract.
  • A new clause after any price change (amendment, appraisal renegotiation).
  • The real estate certification – or contract wording that there are no other agreements and all parties signed.

Questions agents ask

When is the FHA amendatory clause required?

When the borrower did not receive the HUD-92800.5B statement of appraised value before signing the sales contract; the contract must be amended before closing (HUD Handbook 4000.1).

Does the amendatory clause need the sales price?

Yes. The actual dollar amount of the sales price must be inserted, and a higher price requires a revised clause.

Is the amendatory clause required on a bank-owned (REO) sale?

Not when the seller is a lender disposing of REO, HUD, Fannie Mae, Freddie Mac, VA, USDA or another government agency.

Related guides

Add the FHA amendatory clause as a required document on FHA deals in ClosingCode, and every price change can be checked against it before closing.

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Source: HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook, II.A.1 (Amendatory Clause; Real Estate Certification), last revised August 12, 2026 (hud.gov, read October 25, 2026).

General information about FHA-insured loans, not legal or financial advice. The lender applies HUD's current handbook and mortgagee letters. ClosingCode is software; it is not a lender or law firm. This guide is not a substitute for the advice or services of an attorney.