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Roof Damage or Active Leaks
Watch for missing roofing material, visible deterioration, active leaks, water staining or other evidence that the roof may no longer adequately protect the home from moisture.
What does an FHA appraisal look for? FHA property requirements focus on whether the home provides acceptable collateral and meets applicable FHA property standards. This guide helps Utah buyers and real estate professionals recognize common concerns, understand potential repair or inspection issues, and know what to look for before an offer is written.
These are not automatic pass-or-fail tests. They are practical questions for identifying conditions that may deserve a closer look.
Observable health and safety concerns may require correction or additional evaluation.
Structural defects or significant defective conditions can affect property eligibility.
Access, utilities and essential residential systems may be part of the FHA property review.
When compliance cannot be established, additional documentation, correction or qualified evaluation may be required.
FHA property requirements and issues are evaluated individually. Cosmetic age or appearance alone does not automatically mean a property is unacceptable for FHA financing.
Use this guide as a practical FHA property reference. Start with the section that matches the home or issue you are evaluating, then follow the related guidance as needed.
Looking at a home right now? Start with the pre-offer property checklist to identify questions worth reviewing before the appraisal.
An older home does not have to be perfect to qualify for FHA financing. The better question is whether there are readily observable conditions that may affect safety, soundness, marketability or the home's ability to function properly. These are some of the issues worth noticing before the FHA appraisal.
A visible issue may result in a repair, an additional inspection, further documentation—or no repair at all. The appraiser reports relevant conditions, but the lender determines which repairs are required. That distinction matters when evaluating a home before an offer.
Watch for missing roofing material, visible deterioration, active leaks, water staining or other evidence that the roof may no longer adequately protect the home from moisture.
Significant cracking, movement, settlement, deterioration or other visible structural concerns may lead to additional evaluation or repair.
Exposed or visibly frayed wiring, damaged components or an electrical system that appears inadequate or unsafe can require further attention.
A nonfunctioning heating system, damaged mechanical components or utilities that cannot be tested may lead to additional appraisal conditions or re-observation.
Poor water flow, leaks that are causing damage, drainage problems, foul odors or visible signs of septic-system failure deserve closer review.
Paint conditions deserve special attention on homes built before 1978. FHA also addresses certain defective exterior paint surfaces on newer homes.
Water staining, excessive dampness, poor ventilation or odors suggesting mold—especially in basements, attics and crawl spaces—can lead to further inspection or repair.
Visible evidence of termites or other wood-destroying organisms may require inspection by a qualified pest-control professional.
Unsafe conditions, environmental hazards or other readily observable problems affecting occupants or the structural soundness of the property may require additional review.
Normal wear and cosmetic imperfections do not automatically make a home ineligible for FHA financing. FHA guidance allows an existing property to be appraised as-is when minor deficiencies do not affect health and safety or the security and soundness of the property. The circumstances—and the appraiser's professional judgment—matter.
They may happen during the same home purchase, but they serve different purposes. An FHA appraisal helps establish value and FHA property acceptability. A home inspection is a separate property evaluation and should not be replaced by the FHA appraisal.
The FHA appraiser develops an opinion of value and observes, analyzes and reports whether the property meets applicable HUD Property Acceptability Criteria.
A home inspection is a separate evaluation of the property's condition. HUD specifically provides FHA buyers with a disclosure encouraging them to obtain a home inspection rather than relying on the appraisal.
A property may satisfy FHA appraisal requirements and still have maintenance, repair or condition issues a buyer wants to understand. Do not treat the FHA appraisal as a substitute for your own due diligence on the home.
If the appraiser cannot determine whether a property meets FHA requirements, the appraisal may be made subject to evaluation by a qualified individual or entity. Examples in FHA guidance include certain structural concerns, defective mechanical systems, pest evidence, excessive moisture and leaking or worn-out roofs. That specialized evaluation is different from the buyer's general home inspection.
FHA does not require every imperfection in a home to be corrected. The focus is on conditions that affect safety, security, soundness, marketability or the health and safety of the occupants. The nature and severity of the condition determine what happens next.
The appraiser identifies a readily observable property condition that may affect FHA property acceptability.
Depending on the condition, the appraiser may identify a repair, document the deficiency or make the appraisal subject to further inspection.
The mortgagee determines which repairs are ultimately required for the property to meet FHA requirements.
The result may be an as-is appraisal, completed repair, specialized inspection or, in an eligible situation, a repair-completion escrow.
Minor deficiencies caused by normal wear, deferred maintenance or cosmetic condition may not require repair when they do not affect the health and safety of the occupants or the security and soundness of the property.
When a condition prevents the property from meeting applicable FHA property requirements, the appraisal may be conditioned for repair. Required work generally must be satisfactorily resolved before the loan can proceed unless an eligible alternative is permitted.
If the appraiser sees evidence of a potential safety, structural, mechanical, roof, moisture, pest or similar issue that cannot be adequately assessed during the appraisal, a qualified specialist may need to evaluate it.
FHA specifically allows an existing property to be appraised as-is when minor deficiencies do not affect health and safety or the security and soundness of the home. The appraiser still reports and considers the overall condition of the property.
For existing construction, FHA permits the mortgagee to establish a repair escrow when certain alterations or repairs cannot be completed before closing, provided the home is habitable and safe for occupancy at closing. A repair escrow is not automatic and should not be assumed before the lender reviews the specific property, repair and loan.
FHA establishes the baseline property requirements, but a lender or investor may apply additional underwriting or repair conditions. A repair escrow permitted under FHA guidance is not a guarantee that every lender will allow one. The appraisal, underwriting review and lender requirements control the final determination for the transaction.
Not every property condition automatically requires correction. Our complete FHA Required Repairs in Utah guide explains what can trigger a repair, what may be accepted as-is, who decides, who may pay, whether repairs must be completed before closing and when an FHA repair escrow may be possible.
FHA financing can work with private wells and onsite septic systems, but the property still needs a safe water supply, acceptable sewage disposal and functional utility services. The details matter—especially on rural and semi-rural Utah properties.
When a property uses an individual water supply system, the water quality must meet the requirements of the applicable health authority. If there are no local or state water-quality standards, FHA references EPA drinking-water standards.
An onsite sewage system must be adequate to dispose of domestic waste without creating a nuisance or public-health hazard. If the appraiser observes readily observable signs of system failure, a qualified inspection may be required.
FHA property review also considers water, sewage, electricity, natural gas and other utility services. Utility arrangements and access must support the property and comply with applicable FHA property requirements.
FHA's Handbook contains specific separation distances between an individual well and potential sources of contamination. However, HUD issued a nationwide waiver on July 27, 2026 that changes how those distance requirements may be applied to existing construction.
When the waiver applies, the existing property's private water system must meet the distance requirements of the applicable local jurisdiction.
The mortgagee must document acceptable water-testing results when relying on the waiver for the existing property's well configuration.
The July 2026 waiver applies to existing construction only. It does not waive FHA's Minimum Property Standards for new construction.
Outside of the July 2026 distance-waiver situation, FHA identifies several circumstances in which well-water testing is required, including—but not limited to—the following:
When FHA requires a well-water test, the collection and transport of the sample must be handled by an acceptable disinterested third party.
FHA directs the mortgagee to confirm connection to a public or community water system whenever feasible and available at a reasonable cost. Similar guidance applies to public or community sewage disposal. If connection costs are not reasonable, an existing onsite system may be acceptable when it functions properly and meets applicable local health-department requirements.
FHA establishes the federal baseline, but private-well and septic requirements can also depend on the applicable local health authority, environmental agency or municipality. For existing construction, HUD's July 2026 waiver permits the applicable local jurisdiction's well-distance requirements to be used when the property complies with those requirements and the mortgagee documents acceptable water-testing results. New construction remains subject to FHA's applicable Minimum Property Standards.
FHA property guidance can be affected by Handbook updates, Mortgagee Letters and active HUD waivers. The information above reflects the current FHA Handbook together with HUD's active July 2026 Individual Water Well Distance waiver.
FHA financing is not limited to a traditional detached house. Depending on the property and program requirements, one- to four-unit homes, condominiums, townhomes, manufactured homes and certain mixed-use properties may all be eligible.
Except where FHA guidance provides otherwise, FHA Single Family programs are generally designed for owner-occupied principal residences containing one to four dwelling units. Each property type can have additional eligibility, appraisal, occupancy or underwriting requirements.
Detached and semi-detached single-family homes are standard FHA property types. Townhouses and row houses may also qualify when the property and ownership structure meet FHA requirements.
A one-unit residential property with one qualifying Accessory Dwelling Unit remains a one-unit property for FHA purposes. The ADU must meet FHA's definition and applicable property and zoning requirements.
FHA can insure residential properties containing two, three or four dwelling units. These properties have additional underwriting requirements, and three- and four-unit properties are subject to FHA's self-sufficiency rental-income test.
A condominium unit may qualify when it is in an FHA-approved project, meets FHA's definition of a Site Condominium, or successfully completes the applicable FHA Single-Unit Approval process.
FHA financing can be available for manufactured housing, but additional construction, foundation, HUD-label and real-estate requirements apply. Manufactured homes are evaluated under their own FHA property acceptability rules.
Properties meeting FHA's specific definition of a Site Condominium can receive different treatment from a traditional condominium. Qualifying Site Condominiums do not require Condominium Project Approval or Single-Unit Approval.
An FHA borrower can purchase a residential property with multiple dwelling units when the applicable occupancy and underwriting requirements are met. A three- or four-unit property has an additional FHA self-sufficiency test based on the property's rental income.
Certain mixed-use one- to four-unit properties may qualify for FHA financing. FHA requires at least 51% of the entire building square footage to be residential, and the commercial use cannot adversely affect the health and safety of the residential occupants.
A property can fall within an FHA-eligible category and still have additional requirements involving occupancy, appraisal findings, condominium approval, manufactured-home eligibility, zoning, utilities, property condition or lender overlays. Property classification alone does not guarantee FHA approval.
You do not need to be an appraiser or home inspector to notice obvious property concerns. Use this list as a quick pre-offer screen for conditions that may deserve a closer look before the FHA appraisal is ordered.
Seeing one of these conditions does not automatically mean the property is ineligible for FHA financing. The appraiser reports applicable conditions, and the lender reviews the appraisal and supporting documentation to determine whether a repair, inspection, certification or other action is required.
Look for missing or damaged roofing, sagging, visible leaks, ceiling stains or other signs that the roof may not adequately protect the home from moisture.
Notice significant cracking, settlement, movement, damaged structural components or other conditions that suggest possible structural instability.
Pay particular attention to defective paint on homes built before 1978, including paint on windows, doors, porches, railings, garages and other improvements.
Look for exposed or visibly frayed wiring, damaged fixtures, missing covers or other electrical conditions that appear unsafe or obviously deficient.
Confirm that the home appears to have a permanently installed, functioning heat source capable of supporting comfortable, safe residential use.
Watch for major leaks, poor water flow, damaged plumbing, missing hot water or signs that water or waste systems may not function properly.
Look in basements, crawl spaces, ceilings and around windows for excessive dampness, active water intrusion, staining or other evidence of moisture problems.
Watch for visible evidence of wood-destroying insects, damaged wood or signs of prior or active pest infestation.
Look for obvious fall hazards, severely deteriorated steps, unstable decks or railings and other conditions that appear unsafe.
On private systems, notice odors, standing sewage, poor drainage, unusual water condition or anything suggesting the well or septic system may require testing or inspection.
Pay attention to unusual access, converted rooms, additions or spaces that may not function like normal residential living areas or may raise zoning or appraisal questions.
Notice anything else that could affect occupant safety, property soundness or the home's ability to function as residential housing.
If something on the checklist raises a concern, use our FHA repair requirements guide to understand what may require correction, what can sometimes be accepted as-is, and when further inspection may be needed.
When walking a property, use these three questions. If the answer raises concern, stop guessing and get the condition reviewed before assuming the property will—or will not—work with FHA.
Take a photo and get the condition reviewed early. It is much easier to discuss a possible FHA property issue before the contract and appraisal than after a repair condition appears.
FHA property eligibility depends on the actual condition observed, the appraisal, any required inspections or certifications, the lender's underwriting review and applicable FHA guidance. Cosmetic wear does not automatically require repair, and a visible concern does not automatically make the property ineligible.
These are some of the questions buyers and real estate professionals commonly ask when trying to determine whether a property may work with FHA financing. The answer is often more nuanced than a simple pass or fail.
The FHA appraiser develops an opinion of value and observes, analyzes and reports whether the property meets applicable HUD Property Acceptability Criteria, including FHA Minimum Property Requirements and Minimum Property Standards. Readily observable defective conditions that may affect the property's safety, soundness, security or acceptability are reported for lender review.
The FHA appraisal is not a guarantee that the property is free from defects and should not replace a separate home inspection.
No. FHA allows an existing property to be appraised as-is when minor deficiencies do not affect health and safety or the security and soundness of the property. Normal wear and cosmetic conditions still contribute to the appraiser's overall condition and valuation analysis, but they do not automatically require repair.
No blanket FHA rule says every missing handrail automatically requires repair. In fact, FHA specifically identifies a missing handrail that does not pose a safety threat as an example of a minor or cosmetic condition that may not require repair.
If the condition creates an actual fall or safety hazard, however, the result can be different. The circumstances of the property matter.
FHA guidance says the roof covering should prevent moisture intrusion and have a remaining physical life of at least two years. If the appraiser reports less than two years of remaining life, the appraisal must be made subject to inspection by a professional roofer.
That does not mean every older roof automatically has to be replaced—the observed condition and remaining physical life are what matter.
FHA requires the property to have safe pedestrian access and adequate vehicular access from a public or private street.
Private streets and shared driveways must be protected by a permanent recorded easement, ownership interest, or ownership and maintenance by an HOA. FHA's current Handbook states that private streets and shared driveways do not require a joint maintenance agreement.
Not simply because the property has a private well. FHA identifies circumstances requiring testing, including new construction, a reported well or water deficiency, known or reported unsafe water, and proximity to certain potential contamination sources.
When a test is required, the borrower, owner or another interested party cannot collect or transport the sample. Testing must be performed through an acceptable disinterested third party.
Yes. An existing onsite sewage-disposal system may be acceptable when it is functioning properly and meets applicable local health-department requirements.
The appraiser visually observes the system and surrounding area. If there are readily observable signs of failure, an inspection may be required.
FHA distinguishes Excess Land from Surplus Land. Excess Land is land not needed to support the existing improvement and may have an independent highest and best use. Surplus Land cannot be separately sold and may contribute to the value of the improved parcel.
For example, when a property includes a second legally conforming vacant lot that can be separately divided or developed without creating a zoning nonconformity, FHA directs the appraiser to treat that second lot as Excess Land and exclude its value from the final appraisal value conclusion.
FHA's minimum appraisal-photo requirements include items such as the front and rear of the dwelling, the street scene, kitchen, main living area, bathrooms, bedrooms and basement. The appraiser also includes required comparable-property photographs and additional documentation needed to support the appraisal analysis.
The exact photographs needed can expand based on the property, condition and appraisal findings.
No. FHA specifically provides homebuyers with a disclosure encouraging them to obtain a separate home inspection. The FHA appraisal is performed for mortgage-insurance purposes and does not guarantee that the home is free from defects.
A buyer should not rely on the FHA appraisal as a substitute for their own property due diligence.
Actual property eligibility depends on the appraisal, supporting inspections or certifications when required, current FHA guidance and the lender's underwriting review. Lender or investor overlays may be more restrictive than FHA's baseline requirements.
This guide is based on FHA Single Family policy. For the complete source requirements and current updates, review the FHA Single Family Housing Policy Handbook 4000.1 published by the U.S. Department of Housing and Urban Development.
If an FHA appraisal identifies a property condition, our complete repair guide explains what may require correction, what FHA may accept as-is, who decides, who may pay, whether repairs must be completed before closing and how an FHA repair escrow may work.
FHA property requirements do not mean you need to find a perfect house. If you are considering a Utah home and have a question about the appraisal, a possible repair, the property type or an unusual condition, review the financing and property together before assuming the answer.
Mortgage Loan Advisor
With more than 30 years in mortgage lending, I help Utah buyers, homeowners and real estate professionals understand how FHA financing applies to the actual borrower, property and transaction rather than relying on a generic checklist.
This page is for educational purposes and is not a commitment to lend. FHA eligibility and property acceptability depend on the borrower, property, appraisal, applicable FHA requirements and lender underwriting. FHA guidance reviewed September 2026. Victor Emmel · NMLS #133605 · Coast2Coast Mortgage, LLC · NMLS #376205 · Equal Housing Lender