FHA Appraisal Red Flags: What to Fix Before the Appraiser Shows Up
An FHA appraiser isn’t just pricing the home — they’re checking a safety checklist most buyers and sellers have never seen.
I’ve watched an FHA appraisal stall a closing over something as small as a missing stair handrail. It’s frustrating in the moment, but it’s not arbitrary — FHA appraisers are checking the property against Minimum Property Requirements (MPRs), a safety and livability standard that goes beyond a standard conventional appraisal. Knowing what they look for ahead of time can save you a week or more of back-and-forth.
An FHA appraisal checks a property’s value AND its condition against HUD’s Minimum Property Requirements (MPRs) — covering safety, security, and structural soundness. Common issues that trigger repair requirements include peeling paint on homes built before 1978, exposed wiring, missing handrails on stairs, inoperable heating/cooling systems, roofs with less than 2-3 years of remaining life, and safety hazards near the property. Unlike a conventional appraisal, these items typically must be repaired before the loan can close.
Buying or selling with FHA financing?
Let’s walk through what the appraiser will likely flag before it becomes a closing delay.
Check My FHA Property RequirementsWhy FHA Appraisals Are Different
A conventional appraisal focuses almost entirely on value. An FHA appraisal does both — value AND a habitability/safety review — because FHA loans are government-insured, and HUD requires the property to meet baseline safety standards before insuring the loan. This is precisely why an older or fixer-upper home that appraises fine on a conventional loan can hit real snags with FHA financing.
Most Common FHA Appraisal Red Flags
| Issue | Why It Matters |
|---|---|
| Peeling, chipping, or flaking paint (pre-1978 homes) | Lead-based paint hazard — must be scraped, primed, and repainted in the affected area |
| Exposed or frayed electrical wiring | Safety hazard, typically requires licensed electrician repair |
| Missing handrails on stairs (3+ steps) | Fall hazard — a straightforward, inexpensive fix that’s easy to overlook |
| Roof with under 2-3 years of remaining life | May require replacement or a certified roof inspection confirming remaining life |
| Inoperable HVAC, plumbing, or water heater | Must be in working condition — appraiser will note if not functioning |
| Standing water or evidence of active leaks | Moisture and structural concern that must be addressed |
| Broken windows or missing window/door hardware | Security and weatherproofing issue |
| Wood-destroying organism damage (termites, wood rot) | May require a termite inspection and treatment/repair in Florida especially |
Who Typically Pays for FHA-Required Repairs
This is negotiable and contract-dependent, but common patterns include:
- Seller completes and pays for repairs before closing, most common on a traditional resale
- Buyer and seller split costs or negotiate a credit in lieu of repairs
- An escrow holdback, where funds are set aside to complete repairs shortly after closing (lender approval required, and not available for every type of issue)
🏠 FHA Appraisal Red Flag Self-Check
Walk the property and check anything you notice. Not a substitute for a licensed inspection.
Let’s get ahead of appraisal surprises.
I’ll walk you through what’s likely to get flagged before the appraiser ever shows up.
Start My FHA LoanFAQ: FHA Appraisals and Minimum Property Requirements
What is the difference between an FHA appraisal and a home inspection?
An FHA appraisal determines value and checks the property against HUD’s Minimum Property Requirements for safety and habitability. A home inspection is a separate, more detailed evaluation of the property’s condition and is not required by FHA, though it’s still strongly recommended.
Does peeling paint always require repair on an FHA loan?
It typically requires repair if the home was built before 1978, due to lead-based paint hazard rules, and the paint is peeling, chipping, or flaking on interior or exterior surfaces.
Who has to pay for FHA-required repairs?
This is negotiable between buyer and seller — common arrangements include the seller completing repairs before closing, a credit in lieu of repairs, or in some cases an escrow holdback to complete repairs shortly after closing.
Can a home fail an FHA appraisal?
A home doesn’t “fail” outright, but if it doesn’t meet Minimum Property Requirements, the loan typically can’t close until the flagged issues are repaired or otherwise resolved.
Does the roof need to be brand new for FHA financing?
No, but it generally needs to have at least 2-3 years of remaining useful life, sometimes confirmed with a certified roof inspection if the appraiser flags concerns about its condition.