You should already have signed a HUD form titled "For Your Protection,Get an Inspection." Do you recall seeing that form? If not, here's a link to it: http://24-7homefinder.com/newsimages/FHA%20HUD%20FORM.pdf ~ a very straightforward disclosure regarding the purchase of homes with an FHA loan, and the difference between an appraisal and an inspection. Best advice I could give you is to read this form carefully. Next step would be to discuss the situation with your Buyer's Agent. You do have one, don't you?