FHA Mortgage Requirements: What “Condition of the Home” Really Means

Thinking about using a FHA loan to buy a home? Great choice! This type of financing is flexible and buyer‑friendly. But there’s one part that catches many buyers and sellers off guard: the property must meet FHA’s minimum condition standards. Below is a clear guide to what FHA looks for, common deal-breakers, and how to navigate repairs without losing your mind (or the home).

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FHA’s Big Idea: Safety, Soundness, and Security

FHA appraisals aren’t cosmetic checkups.

They’re focused on whether the home is:

Safe: No immediate health or safety hazards.

Sound: Structurally stable with functional systems.

Secure: Reasonably protected from the elements and unauthorized entry.

This framework is sometimes called “minimum property requirements” (MPR) for existing homes. For new construction, FHA references “minimum property standards” (MPS).Important note: An FHA appraisal is not a full home inspection. You should still hire a licensed home inspector for a deeper assessment.

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What the Appraiser Will Look For

1) Roof and Exterior

     - No active leaks or significant damage.

     - Roof should have reasonable remaining life; major deterioration must be repaired or replaced.

     - Sound gutters/downspouts and proper drainage away from the foundation.    

- Exterior free of conditions that could cause water intrusion or safety hazards.

     - No significant wood rot or peeling paint.

2) Structure and Foundation

     - No obvious structural movement, major cracks, or instability.

     - Crawl spaces and basements dry, accessible, and ventilated.

     - No severe wood rot or compromised load‑bearing elements.

3) Utilities and Mechanical Systems

     - Electrical, plumbing, heating, and (if present) cooling systems must operate safely.

     - No exposed wiring, missing covers (on outlets, switches, and junction boxes), or unsafe panel conditions.

     - A permanent, adequate heat source (portable space heaters don’t count in most cases).

     - Water heater installed safely (including a proper temperature/pressure relief discharge line) and functioning.

4) Health and Safety Red Flags

     - Peeling/chipping paint on homes built before 1978 (lead‑based paint risk) must be properly remediated.

     - Evidence of mold, significant moisture, or pest infestation must be addressed.

     - Broken windows, missing handrails on stairways, trip hazards, or other obvious safety concerns.

     - Bedrooms must have proper egress (a safe way out in an emergency).

     - Missing smoke or CO detectors

5) Water and Sanitation

     - Safe, potable water supply (public or private).

     - Functional, sanitary sewage disposal (public or properly installed private system).

    - Private wells may require water quality testing that meets local or FHA standards.

6) Access and Site

     - Safe, all‑weather access to the property via public street or permanent easement.

     - Outbuildings and detached structures must not present hazards.

7) Appliances and Fixtures

     - Built‑in appliances that come with the home (like an installed oven or dishwasher) should function safely.

     - If a system or fixture is present, it generally needs to work (e.g., a nonfunctional fireplace or pool equipment may need repair, removal, or proper decommissioning depending on the issue). __________________________________________________________________________________

Common FHA “Subject to Repair” Items

These are the things that most frequently trigger required repairs before closing:

- Active roof leaks or heavily worn roofing.

- Exposed electrical wires, missing switch/outlet covers.

- Nonfunctional heat source or unsafe heating setup.

- Chipped/peeling paint on pre‑1978 surfaces (inside or out).

- Missing handrails; damaged steps; trip hazards.

- Broken or inoperable windows/locks.

- Significant wood rot or water intrusion.

- Signs of termites or wood‑destroying organisms (some areas or lenders require         inspections).

- Moisture issues in basements/crawl spaces; inadequate ventilation.

- Missing smoke/CO detectors

- Water heater safety issues (missing discharge pipe, improper venting).

- Pools or spas in disrepair (may need fix, secure, or decommission).

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What Happens If the Appraisal Flags Repairs?

• The appraiser will issue a report “subject to repairs.” Your lender will require those items to be fixed to meet FHA standards.

• The seller commonly completes the repairs before closing; buyers can sometimes negotiate a credit, but FHA typically needs the actual repair done (not just money at closing).

• After repairs, the appraiser usually re‑inspects and updates the report (there may be a re‑inspection fee).

• In limited cases, minor or weather‑related repairs may be eligible for an escrow holdback

                -  ask your lender about what qualifies in your area.

If repairs are extensive or you want to renovate anyway, consider an FHA 203(k) rehab loan, which rolls purchase and renovation costs into one mortgage. There are versions for light updates and for more substantial work.

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FHA Appraisal vs. Home Inspection

FHA appraisal: For the lender; confirms value and that the home meets minimum standards.

Home inspection: For you; deep dive into condition and maintenance needs (even if the home passes FHA, you could still discover costly issues).

Always plan your budget with inspection findings, not just the appraisal.

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Tips for Buyers

- Write the offer with realistic timing to allow for repairs and re‑inspection if needed.

- Prioritize homes in generally good condition if you’re on a tight deadline or budget.

- If you suspect issues (older roof, obvious peeling paint), anticipate repair requests or plan for a 203(k).

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Tips for Sellers

- Do a pre‑listing “FHA check”:

                1.  Fix peeling paint (especially pre‑1978), broken glass, exposed wiring, unsafe steps.

                2.  Service HVAC, check water heater safety, and repair active plumbing leaks.

                3.  Address roof leaks and obvious deterioration; clean gutters and improve drainage.

                4.  Install handrails where required.

                5.  Ensure bedrooms have proper egress and all systems are functional.

                6.  Ensure there is a working smoke detector in every bedroom, and the hallway leading to the bedrooms, and at least one CO detector in the home.

- Keep receipts/photos of repairs—handy for underwriters and appraisers.

- Leave utilities on for the appraisal and any re‑inspection.

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What can the Buyer do if the Seller Won’t Do Repairs?

- Renegotiate price and financing to use a 203(k) rehab loan.

- Switch to a conventional loan if feasible (conventional standards can be more flexible on condition).

- Walk away under your inspection/appraisal contingencies if you can’t reach a solution.

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Final Word

FHA’s property requirements aim to protect you and the lender. If a home is basically safe, secure, and sound—with working major systems and no glaring hazards—you’re likely on the right track. For anything borderline, plan for repairs, lean on your lender and real estate agent, and consider renovation‑friendly options like FHA 203(k).

This is general guidance—programs and interpretations can vary by lender and region. For specifics on your situation, talk with your loan officer and real estate professional.

Note: This is written in regard to using a FHA loan, but can also be applied to VA, RD, and USDA financing, as they all have similar requirements.