Short answerFHA, VA, and USDA appraisers check value and also whether the house is safe, secure, and sound. Common flags are peeling paint on houses built before 1978, missing handrails, roofs with little life left, utilities not on, exposed wiring, water heater safety items, and well or septic concerns. The lender decides which repairs must be done before closing.
Why do these appraisals look at condition?
A conventional appraisal is mostly about value. FHA, VA, and USDA loans are backed by the government, so their appraisers also confirm the house meets minimum property standards. When something does not, the appraisal may be marked subject to repairs, and the loan will not close until the lender is satisfied. In recent local MLS sales I track, about a third of buyers used one of these three loans, so most sellers will meet one.
What gets flagged most often?
| Item | FHA | VA | USDA |
|---|---|---|---|
| Peeling or chipping paint, house built before 1978 | Must be repaired | Commonly required | Commonly required |
| Missing handrails, unsafe stairs, trip hazards | Yes | Yes | Yes |
| Roof leaking or near the end of its life | Yes | Yes | Yes |
| Utilities off at the appraisal | Usually must be on | Usually must be on | Usually must be on |
| Exposed wiring, missing covers, electrical hazards | Yes | Yes | Yes |
| No adequate heat source | Yes | Yes | Yes |
| Water heater without a proper relief valve discharge | Often | Often | Often |
| Well water and septic concerns | Testing may be required | Testing may be required | Testing may be required |
| Wood destroying insect inspection | If the appraiser sees evidence | Required in some areas | If the appraiser sees evidence |
This table summarizes common practice. Each program's handbook and each lender's own rules decide what is required on a specific loan. Ask the lender.
What are the rule books?
- FHA: HUD Handbook 4000.1, the Single Family Housing Policy Handbook. For houses built before 1978, it tells the appraiser to note defective paint and require repair under federal lead rules. In September 2026 HUD proposed rewriting its property requirements; those changes are proposals until HUD adopts them.
- VA: VA Lender's Handbook, VA Pamphlet 26 7, Chapter 12, Minimum Property Requirements. VA updated Chapter 12 in 2026, removing some requirements for appraisals ordered after May 1, 2026.
- USDA: HB 1 3555, Chapter 12, Property and Appraisal Requirements, and 7 CFR 3555. USDA also requires the property to be in an eligible rural area. USDA property rules and eligible areas.
If you are selling
- Fix the cheap, common flags before you list: peeling paint (lead safe practices on pre 1978 houses), handrails, missing covers, the water heater discharge pipe.
- Keep utilities on until closing.
- If you have a well or septic system, gather your records. Well and septic rules.
- A house that is ready for these appraisals can accept offers from more buyers. What inspectors and appraisers may flag when you sell.
If you are buying
- Look for these items at the showing, and ask your lender early how repairs are handled.
- Write your offer so it is clear who handles lender required repairs.
- Know that the appraiser is not your inspector. Get a full home inspection anyway. What the inspection may find.
Who pays for required repairs?
Whoever the purchase agreement and the negotiation say. Neither FHA, VA, nor USDA requires the seller to pay. In practice sellers often make small required repairs to keep the deal moving. Some lenders allow certain repairs to be completed after closing using an escrow holdback; others do not. How repair conditions work.
What John sees in the field
Most required repairs I price for government loans are small: paint, a handrail, a cover plate, a discharge pipe. Done before listing, they cost little. Found by the appraiser two weeks before closing, they cost time and leverage.
When a seller tells me they do not want an FHA or VA buyer, I show them how few items usually stand between their house and a much bigger pool of buyers.
Frequently asked questions
Is an FHA appraisal harder to pass than a conventional appraisal?
It looks at more. A conventional appraisal focuses on value. FHA, VA, and USDA appraisals also check minimum property standards, so condition items can come up.
Does the seller have to pay for FHA repairs?
No rule requires it. Who pays is negotiated under the purchase agreement. Many sellers handle small items to keep the closing on schedule.
Can a buyer use an FHA loan on a house with peeling paint?
Yes, after the paint is repaired. On a house built before 1978, repairs must follow lead safe practices.
Does VA require a termite inspection in Indiana?
VA requires wood destroying insect inspections in some areas. Your lender will tell you whether one is required for your property.
Is the appraisal the same as a home inspection?
No. The appraiser checks value and minimum standards. A home inspector looks at the systems in far more detail. Get both.
Keep reading
Want to know what a buyer's inspector may find before they do?
Book a free pre listing condition walk. I walk the house with you, point out what inspectors and FHA, VA, and USDA appraisers tend to flag, and give you planning ranges so you can decide what to fix, credit, price in, or disclose.
Book a condition walkOr call or text (812) 525-5489, or email john@yourpropertynegotiator.com.
The condition walk is a REALTOR® and contractor evaluation, not a home inspection, and it does not replace one. If you have already signed a listing agreement with another agent, please take these questions to your agent.
Looking at a house and not sure what you are getting into?
Ask for a free Before You Offer review. Send me the listing. I look over the photos, the seller's disclosure, and recent sales, then flag likely condition issues and planning cost ranges before you write an offer.
Request a Before You Offer reviewOr call or text (812) 525-5489, or email john@yourpropertynegotiator.com.
The Before You Offer review is a REALTOR® and contractor review of the listing, not a home inspection. It is for buyers who are not already working with an agent. If you have an agent, please bring these questions to your agent.
Sources
- HUD Handbook 4000.1, II.D.3, defective paint and lead based paint; 24 CFR 200.810
- HUD FHA Drafting Table, proposed property requirement revisions, September 2026
- VA Pamphlet 26 7, Chapter 12, Minimum Property Requirements
- VA Pamphlet 26 7, Change 46, effective for appraisals ordered after May 1, 2026
- USDA HB 1 3555, Chapter 12, Property and Appraisal Requirements
Written by John Long, REALTOR®, 1 Percent Lists Indiana Real Estate. Working contractor who has priced hundreds of home inspection repair requests. Former labor relations negotiator for a major manufacturer and U.S. Coast Guard veteran.
John Long, REALTOR® · 1 Percent Lists Indiana Real Estate · (812) 525-5489 · yourpropertynegotiator.com
This page is general information, not a substitute for a professional home inspection, and not legal, tax, insurance, or lending advice. Ask a real estate attorney about contracts and disclosure, a CPA about taxes, your lender about loan rules, and a licensed inspector or tradesperson about your house. Nothing here guarantees a sale price, net proceeds, repair cost, payment, timeline, appraisal, inspection result, or loan approval. Cost figures are planning estimates, not bids. I own Wardmark Property Operations LLC, a contracting company. You are always free to use any contractor you choose.