You've been pre-approved for an FHA loan, found a home you like, and put in an offer. Then the appraisal comes back with a list of required repairs — and suddenly the deal is in jeopardy. This happens more often than most buyers expect, and it's almost always because they weren't familiar with FHA loan property requirements before they started shopping.

FHA loans are backed by the Federal Housing Administration, and one condition of that backing is that the property itself has to meet a set of standards. These standards aren't just bureaucratic hurdles. They're there to protect you from buying a home with serious safety, structural, or livability problems.

This guide walks through what those standards actually look like, which issues tend to cause problems, and what your options are if something comes up during the appraisal.

Why FHA Has Minimum Property Requirements

The FHA doesn't just evaluate the borrower — it evaluates the property, too. According to HUD Handbook 4000.1, every home purchased with an FHA-insured mortgage must meet a set of Minimum Property Requirements (MPRs) and Minimum Property Standards (MPS). These standards cover three broad areas:

• Safety — The home shouldn't pose risks to its occupants
• Security — The property should be structurally sound and protect against the elements
• Soundness — The home should be in reasonable physical condition without defects that threaten its structural integrity

These requirements exist because the FHA is insuring the loan. If a borrower defaults and the home has major defects, the FHA (and by extension, taxpayers) absorbs that risk. So HUD sets a baseline for what's acceptable.

According to HUD's annual report, the FHA insured approximately 715,000 single-family forward mortgages in fiscal year 2023 — each one requiring the property to meet these standards.

FHA Appraisal vs. Home Inspection: They're Not the Same Thing

One of the most common misunderstandings among FHA buyers is assuming that the FHA appraisal replaces a home inspection. It doesn't. These are two different processes with different purposes.

FHA Loan Property Requirements: What the Appraiser Looks For

The FHA appraiser evaluates the home based on HUD guidelines. Here's a category-by-category breakdown of what needs to pass before the loan can close.

This isn't an exhaustive list — the full HUD Handbook 4000.1 runs hundreds of pages — but these are the categories where issues come up most often. According to data from the Consumer Financial Protection Bureau, understanding property conditions before closing is one of the most important steps in avoiding post-purchase financial stress.

Common FHA Deal-Killers and What You Can Do About Them

Not every appraisal issue is a deal-breaker. Some problems can be resolved before closing, while others may force you to walk away or consider a different mortgage loan program.

Issues that usually require repair before closing:

• Peeling paint on a pre-1978 home — The seller typically needs to scrape and repaint affected areas. This is a lead paint safety concern, and the FHA won't waive it.
• Roof with less than 2 years of remaining life — The seller may need to replace or repair the roof, or credit the cost at closing in some cases.
• Missing handrails on stairs or decks — Usually a quick, inexpensive fix.
• Broken windows or doors — Must be functional for security and weather protection.
• Non-functioning HVAC systems — The home needs adequate heating for the region.

Issues that may kill the deal entirely:

• Major structural defects — Significant foundation problems or load-bearing wall damage
• Active termite infestation — Requires treatment and repair, which can get expensive
• Environmental contamination — Proximity to hazardous waste or contaminated soil
• Non-permitted additions — Unpermitted rooms or structures may not count toward square footage and could create legal issues

Your options when issues come up

If the FHA appraisal flags a required repair, you generally have three paths:

1. Negotiate with the seller — Ask the seller to make the repairs before closing. This is the most common approach.
2. Adjust the purchase price — In some cases, the buyer can negotiate a lower price, though certain FHA repairs must still be completed before closing regardless of price adjustments.
3. Walk away — If the issues are too large or the seller won't cooperate, your earnest money is typically protected under the appraisal contingency.

A fourth option exists if you're willing to take on a renovation project: the FHA 203(k) loan. This program rolls renovation costs into the mortgage, but it comes with its own set of guidelines, timelines, and contractor requirements. It's not a simple workaround — it's a different loan product entirely.

Special Property Types: Condos and Manufactured Homes

If you're looking at a condo, there's an extra layer of requirements. The condo project itself must be FHA-approved, not just the individual unit. According to HUD, this means the condo association's finances, insurance, owner-occupancy ratios, and governing documents all need to meet FHA standards. You can search HUD's approved condo list online before making an offer.

Manufactured homes must be built after June 15, 1976 (when HUD construction standards took effect), permanently affixed to a foundation, and classified as real property — not personal property. The foundation must also meet HUD guidelines, which typically requires an engineer's certification report (which may cost an additional $300 - $700) confirming the foundation meets FHA/HUD standards for the area. Mobile homes on temporary foundations won't qualify.

How FHA Property Requirements Compare to Conventional Loans

Buyers sometimes wonder if switching to a conventional loan would avoid property issues. Conventional appraisals are generally less strict about property condition, but they still require the home to be in reasonable shape. The trade-off? Conventional loans typically require higher credit scores and larger down payments.

According to Fannie Mae's Selling Guide, conventional appraisals still flag safety hazards and conditions that affect the home's marketability, but the bar for required repairs is lower than FHA's. If the property you love has minor issues that won't pass FHA, it might be worth exploring conventional financing — assuming your credit profile supports it. You can use our mortgage calculator to compare potential payment differences.

Tips for House-Hunting With an FHA Loan

Knowing the property requirements ahead of time can save you weeks of frustration. Here are some practical steps:

• Share this checklist with your real estate agent. A good agent will steer you toward FHA-friendly properties and away from obvious problems.
• Look carefully at pre-1978 homes. The peeling paint rule trips up a lot of buyers. Walk the exterior and check window frames, eaves, and trim.
• Ask about the age of the roof, furnace, and water heater. These are the systems most likely to cause appraisal issues.
• Get a home inspection before the appraisal. If you can schedule an inspection during your option period, you'll know about problems before the appraiser arrives — giving you time to negotiate or move on.
• Budget for surprises. Even if everything passes, having funds set aside for small repairs post-closing is smart planning.

Frequently Asked Questions About FHA Property Requirements