FHA Appraisal Requirements: What Every Home Must Pass Before Closing
Most buyers find out about FHA appraisal requirements at the wrong time — after they're already in love with a house and under contract. The appraisal comes back with conditions, the seller pushes back, and suddenly the deal is in jeopardy. It doesn't have to work that way. Understanding FHA appraisal requirements before you start making offers gives you a real edge. So let's look at what the FHA appraiser actually checks, what happens when a property doesn't pass, and how you can use this knowledge to make smarter decisions.
If you're using an FHA loan to buy a home, the appraisal does two things at once. It establishes the property's market value. And it checks whether the home meets HUD's Minimum Property Standards. That second layer is what makes FHA appraisals different from all other loan types.
What FHA Appraisers Actually Look For
The FHA appraiser's job is not just to say what a home is worth. They also ask: is this home safe to live in? Because the FHA insures the loan — meaning taxpayers are on the hook if the borrower defaults — HUD requires that every property meet baseline standards before the insurance kicks in.
Per HUD Handbook 4000.1, FHA appraisers must evaluate properties against Minimum Property Standards covering safety, soundness, and security before HUD will insure the loan. These three words — safe, sound, secure — are the framework behind every FHA appraisal condition you'll ever see.
According to HUD, FHA insured approximately 765,000 single-family forward mortgages in fiscal year 2023, making FHA financing one of the most widely used low-down-payment paths to homeownership in the country. So a lot of homes go through this process each year. But many buyers still don't know what the appraiser is checking until they get a surprise report back.
Here's the practical list. These are the areas HUD's Minimum Property Standards focus on:
| Category | What the Appraiser Checks | Common Flags |
|---|---|---|
| Safety | No exposed wiring, working smoke detectors, no lead-based paint hazards (pre-1978 homes) | Peeling paint on older homes, missing smoke detectors, open junction boxes |
| Structure | Sound foundation, no significant settling or damage, roof with at least 2 years of remaining life | Visible cracks in foundation, roof near end of life, damaged framing |
| Systems | Working plumbing, electricity, water heater, and HVAC; all must be functional at time of appraisal | Non-functioning furnace, no hot water, broken electrical panel |
| Accessibility | Safe all-weather pedestrian and vehicular access to the property | Unpaved private road with no maintenance agreement, blocked access points |
| Property Condition | No evidence of wood-destroying insects, no major moisture or mold in crawl spaces | Termite damage, active water intrusion, visible mold |
| Site | Proper drainage away from the foundation, no hazardous, noisy, or polluting nearby conditions | Standing water near foundation, proximity to industrial sites or heavy traffic |
One thing worth knowing: the appraiser must be listed on the FHA Appraiser Roster, which requires state certification. So you can't use just any licensed appraiser for an FHA transaction.
FHA Appraisal vs. Home Inspection: Why the Difference Matters
This is the confusion we see most often. Buyers assume the FHA appraiser will find every problem with a house. That's not how it works — and the distinction matters a lot for your protection.
The FHA appraiser looks at visible, observable conditions that could affect health and safety. They note what they see. They're not pulling off outlet covers, testing every appliance, or inspecting the attic insulation. That's what a home inspector does.
The CFPB advises all homebuyers to get an independent home inspection, noting that an appraisal is not a substitute for a thorough property inspection. We agree completely. The appraiser works on behalf of HUD — not you. Their job is to protect the insurance fund. Your inspector works for you.
| Factor | FHA Appraisal | Home Inspection |
|---|---|---|
| Who does it | FHA Roster-certified appraiser | Licensed home inspector |
| Who they work for | HUD (to protect the insurance fund) | The buyer |
| Main purpose | Confirm value and check Minimum Property Standards | Identify all material defects throughout the property |
| Depth of review | Visible conditions only; no invasive testing | Full systems check — roof, HVAC, plumbing, electrical, structure |
| Required by lender? | Yes — always for FHA loans | No — but strongly recommended for every buyer |
| Cost (approximate) | $400–$600 typically | $300–$500 typically |
Always get a home inspection. Even if the FHA appraisal comes back clean. Even with a newer home. A good inspector will find things an appraiser will never see — and knowing those things before closing puts you in a much better position.
Buyers using a conventional loan skip this extra layer of property review from the appraiser. So with FHA, you actually get more eyes on the property's condition — but those eyes are not working for you.
What Happens When a Property Doesn't Pass FHA Appraisal Requirements
If the FHA appraiser flags issues, those items become "required repairs" or appraisal conditions. The loan won't close until those conditions are satisfied. But here's what many buyers don't realize: the deal isn't automatically dead.
Per HUD Handbook 4000.1, an FHA appraisal is valid for 180 days from the effective date of the appraisal report, giving buyers and sellers time to address required repairs without restarting the process from scratch.
So what are your options when the appraisal comes back with conditions?
- Seller makes the repairs. The appraiser does a re-inspection to confirm completion. This is the most common path.
- Price reduction instead of repairs. This rarely works with FHA — repairs must happen before closing in most cases, not after.
- Buyer covers the repairs. This is allowed in some cases. However, the buyer typically can't benefit from their own repair costs in a way that inflates the appraised value.
- Walk away. If the seller won't fix anything and the issues are serious, you can exit the contract — especially if you have an appraisal contingency in place.
In our experience working with Colorado homebuyers, sellers of older homes are sometimes caught off guard by FHA repair conditions. Homes built before 1978 almost always get flagged for peeling paint — because lead-based paint is a specific HUD health hazard. That single issue trips up more FHA transactions than buyers expect. Budget for it, especially in markets with older housing stock.
Pre-1978 homes: If your home was built before 1978, the FHA appraiser will flag any chipping, peeling, or flaking paint — inside or outside. The paint must be stabilized (scraped, primed, and repainted) before closing. This applies even to minor peeling on window sills or garage trim.
How to Use FHA Appraisal Requirements Before You Make an Offer
Most buyers learn about FHA requirements after they're under contract. But smart buyers think about this earlier — before making an offer. That shift in timing makes a real difference.
When you're touring homes, look for obvious red flags. Is there peeling paint on a pre-1978 home? Does the roof look like it's near the end of its life? Is there standing water near the foundation? Any of these could trigger appraisal conditions. You don't need to walk away — but you need to factor the potential repair cost or negotiation friction into your offer strategy.
If you see a property with a lot of deferred maintenance, it's worth asking your lender whether a standard FHA loan makes sense — or whether an FHA 203(k) rehabilitation loan might be a better fit. The 203(k) wraps repair costs into the mortgage, so the property doesn't have to pass the full appraisal checklist before closing. That's one of several options across the range of mortgage loan programs worth understanding before you commit to a home.
Going in with this knowledge also strengthens your negotiating position. If you can point to specific FHA appraisal requirements a property is likely to fail, you have a concrete reason to ask the seller to address those items upfront — or reduce the price to account for them. That's a much stronger position than reacting after the appraisal comes back with conditions.
Wondering What Else Affects Your FHA Loan Approval?
FHA appraisal requirements are just one piece of the picture. Your credit score, income, debt load, and down payment all factor in too. This free resource breaks down what lenders actually look at — in plain language.
See What Actually Affects ApprovalFrequently Asked Questions
How long is an FHA appraisal valid?
Per HUD Handbook 4000.1, an FHA appraisal is valid for 180 days from the effective date of the report. So if required repairs take time to complete, you generally don't need a new appraisal — as long as the work wraps up within that window and the appraiser can confirm it.
Who pays for repairs required by an FHA appraisal?
There's no rule that forces the seller to pay — it's a negotiation. In practice, sellers often cover repairs because they want the deal to close. But buyers can also agree to cover certain items, or the parties can split costs. The key is that repairs must be done before closing, not after, for a standard FHA loan.
Does FHA require a home inspection?
No — FHA does not require a home inspection. But we strongly recommend getting one regardless. The FHA appraiser checks visible conditions against Minimum Property Standards, not every possible defect. A licensed home inspector provides a much more detailed picture of the property's actual condition, and that information protects you as the buyer.
Can I still get an FHA loan if the seller won't make required repairs?
If the seller refuses to make repairs that the appraiser flagged, the loan typically can't close in its current form. Your options are to cover the repairs yourself, walk away (if you have an appraisal contingency), or explore whether an FHA 203(k) rehabilitation loan fits the situation. Talk to your lender before assuming the deal is over — there may be a path forward.
What types of homes don't qualify for FHA financing?
Homes with major structural problems, active water or mold issues, non-functional systems, or serious safety hazards may not pass FHA appraisal without repairs. Investment properties (non-owner-occupied) also don't qualify for standard FHA loans. Additionally, the loan amount must fall within FHA county loan limits set each year by the FHFA.