What are the inspection requirements for buying a home with an FHA loan?

If you plan to purchase a home with an FHA loan, you will need to pass an FHA inspection before closing. An FHA loan is a government-backed mortgage that is attractive to first-time homebuyers because it is easier to qualify for and requires only a small down payment. By 2025, 15% of buyers who financed their home opted for an FHA loan.

The U.S. Department of Housing and Urban Development (HUD) determines the minimum real estate standards that homes must meet before an FHA loan can be approved. These are intended to protect the buyer and the investment by ensuring that the home is priced correctly and is free of problems that could compromise living conditions.

That’s where the FHA appraisal inspection comes into play. The appraiser will check that the home is safe to live in, structurally sound and free of major health or safety hazards. While not as detailed as a full home inspection, it notes certain issues (such as roof problems, peeling paint, water damage, or faulty utilities) that may need to be addressed before closing on the home.

Knowing what the FHA requires to pass an inspection can help you decide whether the home you’re looking at makes sense — and how to proceed if the appraiser spots repairs, whether buying a home in Kansas City or Madison, WI.

What is an FHA rating?

An FHA appraisal works differently than a conventional home appraisal: Not only does the appraiser assess the value of the home, he also ensures that the property meets basic HUD livability standards. When your lender sends an FHA-approved appraiser, they will walk through the property and document any notable features, as well as prepare a report with comments on the safety, security and livability of the home.

An FHA appraisal inspection costs more than a regular appraisal because it is more in-depth and requires certain qualifications. Most buyers can expect to pay somewhere in between $400-$700 for an FHA appraisal, depending on home size, location and demand. Although an FHA inspection looks at certain areas of a home, it does not replace a buyer’s home inspection. We will discuss this in more detail later.

FHA Inspection Requirements for Loans

Because FHA loans are designed to make homeownership more accessible, HUD wants to make sure the home is safe and livable before approving the loan. The “inspection” portion of the FHA rating focuses on three major themes:

• Safety: no conditions that endanger the health or safety of the occupants
• Security: protected from unauthorized access and the elements
• Structural strength: is likely to remain in good condition for the foreseeable future

Typically, FHA loan appraisal inspections will look for these requirements:

Safety and habitability

• No exposed wiring or obviously unsafe electrical panels.
• Working smoke detectors (and CO detectors if locally required).
• Safe stairs with handrails; stable, flat floor; no major tripping hazards.
• No active roof/foundation leaks, large mold spots, or severely water damaged areas.
• For homes built before 1978, no flaking/peeling paint that could pose a lead hazard.

Structure and exterior

• Foundation and exterior walls free of major cracks, bending or shifting.
• Roof without active leaks and usually with a remaining lifespan of at least 2 years.
• Siding, gutters, downspouts and grading must guide water away from home.
• Windows and doors work/lock properly and are not broken.

Systems and tools

• A permanently installed heating system that can maintain a livable temperature.
• Functional sanitary facilities: hot and cold running water, drainage works, no major leaks.
• Safe, grounded electrical system.
• Public or approved water and sewer systems (or septic systems) connected and functioning; well systems must be safe.
• If AC is installed it should work, although AC is not always required.

Domestic livability

• At least one fully functioning bathroom (sink, toilet, bath/shower).
• Countertop and sanitary function; all included devices are safe.
• No large holes in walls/ceilings/floors that expose wiring or framing.
• Doors and windows open/close properly; safe access from the driveway/sidewalk to the house.

Location and access

• Safe access all year round via public or approved private road/driveway.
• Good site layout, drainage and no major soil problems or unsafe easements.
• Property is suitable for residential use (no dominant commercial use or serious environmental hazard).

Multi-unit properties (2–4 units)

• All units must meet FHA safety and livability standards.
• Each unit requires working heating, plumbing and electrical systems.
• Common areas (hallways, stairs, washrooms) should be safe and well lit.
• Utilities must be securely configured and individually metered or clearly identified.

Manufactured Homes

• Must be built after June 15, 1976, with HUD certification labels.
• Must be on a permanent, HUD-compliant foundation (no temporary blocks).
• Must be classified as real property, not personal property.
• All utilities (water, sewer/septic, electricity, heating) must be permanent and functioning.

FHA Rating and Inspection vs. Home Inspection

Many FHA buyers think they can skip a home inspection because the FHA appraisal includes a basic safety check. But the FHA appraisal is a superficial assessment for credit purposes and only states whether the home meets HUD’s minimum real estate standards. While it may be tempting to put off a home inspection for reasons of money or time, the two inspections actually work best together.

A home inspection ordered by the buyer is optional, but it will give you a clear picture of the condition of the home. A licensed inspector will spend several hours performing a detailed inspection of the home: testing the home’s appliances and systems, carefully examining the roof, foundation, and plumbing, checking attics and crawl spaces, and noting 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 issues before the FHA appraisal, or walk away if deal breakers are revealed.

What Happens After an FHA Appraisal

Once the FHA appraiser submits their report, your lender reviews paperwork and then advises on next steps.

• If the value supports your loan: The appraisal is at or above the purchase price and your loan is finally closed.
• If the appraiser finds repairs: The lender issues a conditional approval, which states what needs to be fixed before the business closes, usually things like peeling paint, unsafe wiring, or missing handrails.
• Decide how you want to proceed: Typically, sellers are responsible for FHA-required repairs to keep sales on track.
• Repairs are checked: Once the work is done, the lender will order a quick re-inspection to confirm that everything meets FHA standards.
• You are given permission to close: After the lender signs off on the value and repairs, your loan moves on to the final closing steps.

What would cause a home to fail an FHA inspection?

FHA inspection requirements must be met before the lender can approve the loan. Some issues may cause the financing to fail but can be resolved before the financing closes; others could mean the home doesn’t qualify for FHA assistance and the sale doesn’t go through.

The most common issues that arise after an FHA appraisal are:

• Repairs that the seller will not carry outeven if they are small or cheap.
• Signs of bigger underlying problems (sloping floors, moisture stains, aging mechanical parts) that require specialist inspections.
• Unauthorized additions or renovationsespecially garage conversions or structural changes.
• Large systems that ‘barely’ function (weak heating, border wells, roofs with a very limited remaining lifespan).
• Property configuration issuessuch as missing HUD tags on manufactured homes or multi-unit buildings and unclear utilities.
• Location-based concernssuch as high-risk flood areas, industrial proximity or unusual easements.

FHA Inspection Requirements: Bottom Line

A home doesn’t have to be perfect to meet FHA inspection requirements. As long as the property is structurally sound, the systems are working and there are no obvious health or safety concerns, most homes can qualify.

The biggest hurdles in the FHA loan inspection process usually come from sellers refusing to make repairs or signs that indicate larger underlying problems. If you go into the assessment knowing what they are looking for, you will be better prepared to navigate buying a house with an FHA loan.