If you plan to purchase a home with an FHA loan, it must pass an FHA inspection before closing. FHA loans are government-backed mortgages that are attractive to first-time homebuyers because they are easy to qualify for and require a small down payment. In 2025, 15% of buyers financing a home chose an FHA loan.
The U.S. Department of Housing and Urban Development (HUD) sets minimum equity standards that a home must meet before an FHA loan is approved. These are designed to protect the buyer and their investment by ensuring that the home is priced correctly and free of issues that could compromise living conditions.
This is where the FHA appraisal comes into play. The appraiser will make sure that the home is safe to live in, is structurally sound, and does not pose significant health or safety hazards. This isn’t as detailed as a full home inspection, but it will point out specific issues that may need to be fixed before closing, such as roof issues, peeling paint, water damage, or malfunctioning utilities.
Knowing what the FHA requires to pass inspection can help you decide if the home you’re eyeing makes sense. And whether you’re buying a home in Kansas City or Madison, Wisconsin, we can help you decide how to proceed if the appraiser flags repairs.
What is an FHA rating?
FHA appraisals are different from traditional home appraisals. The appraiser not only evaluates the value of the home, but also determines whether the property meets basic HUD livability standards. When a lender sends an FHA-certified appraiser, he or she will walk through the property and not only document any notable features, but also create a report that includes comments about the home’s safety, security, and livability.
FHA appraisal inspections are more detailed and require specific qualifications, so they cost more than regular appraisals. Most buyers can expect to pay between $400 and $700 for an FHA appraisal, depending on the size, location, and needs of the home. Although the FHA inspection inspects some parts of the home, it does not replace the buyer’s home inspection. More on this later.
FHA Loan Inspection Requirements
Because FHA loans are intended to make homeownership more accessible, HUD wants to make sure your home is safe and livable before approving your loan. The “inspection” portion of the FHA evaluation focuses on three broad themes:
Safety: The absence of conditions that threaten the health or safety of the occupants. Security: The property is protected from unauthorized entry and the elements. Structural integrity: The property is likely to remain in good condition for the foreseeable future.
In most cases, FHA’s loan appraisal inspection looks at the following requirements:
Safety and livability
There are no exposed wiring or obviously unsafe electrical panels. Working smoke detectors (and CO detectors if required in your area). Safe stairs with handrails. Stable, uniform flooring. There are no significant tripping hazards. There are no ongoing roof/foundation leaks, large mold spots, or areas that have sustained severe water damage. For homes built before 1978: No peeling/chipping paint that could pose a lead hazard.
Structure and appearance
There are no major cracks, warps, or shifts in the foundation and exterior walls. The roof has no active leaks and typically has at least two years of useful life remaining. Siding, gutters, downspouts, and grading should direct water away from your home. Windows and doors work/lock properly and are not broken.
System and utilities
Permanent heating system capable of maintaining habitable temperatures. Functional plumbing: Hot and cold water is flowing, drains are working, and there are no major leaks. Safe grounded electrical system. A public or approved water and sewer (or septic) system is connected and functioning. Well, the system has to be secure. It should work if AC is installed, but AC is not always necessary.
interior livability
At least one fully functional bathroom (sink, toilet, bathtub/shower). Kitchen sink and plumbing features. All included equipment is safe. There are no large holes in the walls/ceiling/floor that expose wiring or frames. Doors and windows open and close properly. Safe access to your home from your driveway/sidewalk.
Site and access
Safe access year-round via public or approved driveway/driveway. Proper site grading, drainage, no major soil issues or dangerous easements. The property is suitable for residential use (no dominant commercial use or significant environmental hazards).
Multi-unit properties (2-4 units)
All units must meet FHA safety and habitability standards. Each unit requires heating, plumbing, and electrical systems. Common areas (corridors, stairs, laundry rooms) must be safe and well-lit. Utilities must be securely configured and individually metered or clearly identified.
housing
Must be manufactured after June 15, 1976 and have a HUD certification label. Must be on a permanent HUD-compliant basis (not a temporary block). It should be classified as real property, not personal property. All utility connections (water, sewer/septic, electric, heat) must be permanent and functioning.
Comparison of FHA appraisals and inspections and home inspections
Many FHA buyers believe they can skip a home inspection because the FHA appraisal includes basic safety checks. However, FHA’s appraisal is a surface-level examination for lending purposes and only notes whether a home meets HUD’s minimum property standards. Although it may be tempting to pass a home inspection due to money or time constraints, it is actually most effective to do a combination of the two inspections.
A buyer-ordered home inspection is optional but will give you a clear picture of the condition of the home. A qualified inspector will spend several hours checking your home thoroughly. They test built-in appliances and home systems, closely inspect the roof, foundation, and plumbing, check attics and crawl spaces, and document any immediate or upcoming repairs and maintenance.
Depending on what the inspection reveals, you may be able to negotiate repairs or the purchase price, address the issue before the FHA appraisal, or walk away if a deal violation is revealed.
What Happens After an FHA Appraisal?
Once the FHA appraiser submits their report, your lender will review the documents and advise you on next steps.
If the value supports the loan: The appraised value is greater than or equal to the purchase price and the loan advances to final underwriting.
If the appraiser notes repairs: The lender will issue a conditional approval listing things that must be fixed before closing. Usually it’s peeling paint, unsafe wiring, or missing handrails.
Decide how to proceed: In most cases, the seller is responsible for any repairs required by FHA to get the sale back on track.
Repairs are checked: Once the work is complete, the lender will order a quick re-inspection to ensure everything meets FHA standards.
Closing permission will be obtained. After the lender signs off on the value and repairs, the loan moves to the final closing step.
What causes a home to fail an FHA inspection?
FHA inspection requirements must be met for a lender to approve a loan. Some issues may delay your financing, but they may be resolved before closing. It may also mean that the home is not eligible for FHA support and the sale will not go through.
The most common issues encountered after an FHA appraisal are:
The seller cannot perform any repairs, even if they are minor or inexpensive.
Signs of a larger underlying problem (sloping floors, moisture stains, aging machinery) that requires professional inspection.
Unauthorized additions or alterations, especially garage alterations or structural changes.
Major systems are “barely” functioning (weak heating, marginal wells, roof with very limited remaining life).
Property configuration issues (such as missing HUD tags in manufactured homes or multi-unit buildings with unclear utilities).
Location-based concerns such as high flood risk areas, proximity to industrial areas, and unusual easements.
FHA Inspection Requirements: Conclusion
Your home doesn’t have to be perfect to meet FHA inspection requirements. Most homes are eligible, as long as the property is structurally sound, has functioning systems, and poses no obvious health or safety hazards.
The biggest hurdles in the FHA loan inspection process typically result from the seller refusing to make repairs or exhibiting signs that suggest a larger underlying problem. Once you know what they’re looking for and go to the appraisal, you’ll be ready to buy a home with an FHA loan.
