An FHA appraisal does not mean every defect in a home has to be repaired. FHA focuses on conditions that affect the property's safety, security, soundness, continued marketability and the health and safety of the occupants. The lender reviews the appraisal and determines which repairs are actually required for FHA financing.
One important distinction: the appraiser identifies and reports relevant property conditions, but the mortgagee makes the final determination about which repairs are required for the FHA-insured transaction.
Start with the rule that determines whether a condition actually requires action, then work through the common repair issues, what may be accepted as-is, who pays, timing, repair escrows and what happens after the work is completed.
Important: FHA does not maintain a simple universal list saying every visible defect must be repaired. The actual condition, appraisal findings, applicable FHA requirements and lender review determine the result.
FHA does not require every defect, maintenance item or cosmetic issue to be corrected. The important question is whether the condition affects the property's safety, security, soundness, continued marketability or the health and safety of its occupants.
When the appraisal identifies noncompliance with applicable FHA Minimum Property Requirements or Minimum Property Standards, the appraiser reports the condition and identifies repairs necessary to bring the property into compliance.
FHA directs the appraiser to limit required repairs to conditions necessary to maintain the property's safety, security and soundness, preserve its continued marketability, or protect the health and safety of the occupants.
The FHA Handbook expressly states that regardless of the appraiser's suggested repairs, the mortgagee determines which repairs are required. The appraisal provides the property findings; the lender makes the FHA lending determination.
The Handbook does not tell the appraiser to require every imperfect component to be replaced. Required repairs are supposed to be limited to conditions that serve one of these purposes.
The appraiser's observation is important, but it is not the entire underwriting decision.
The appraiser identifies a readily observable property deficiency or adverse condition.
When necessary, the appraiser reports the repair or calls for additional inspection by an appropriate specialist.
The lender reviews the appraisal and supporting documentation and determines which repair is required for the FHA loan.
Existing homes can have ordinary wear, deferred maintenance and cosmetic deficiencies without automatically triggering a required repair. The condition has to be evaluated in the context of FHA's property requirements and the lender's review. The next section shows the types of conditions that most commonly raise repair questions.
There is no universal FHA list saying every defect automatically requires repair. But some property conditions are more likely to result in a required repair, additional inspection or further lender review.
The roof must protect the home from moisture and provide reasonable future utility. A roof with active deficiencies or less than two years of remaining physical life can result in additional action.
May require roofer inspection or repairSignificant settlement, foundation movement, bulging walls or other evidence of possible structural failure can trigger inspection by an appropriately qualified professional.
Often requires specialist evaluationFHA appraisal protocol addresses electrical capacity and visible conditions such as frayed wiring, exposed wires and deficient switches, fixtures or receptacles.
Repair or certification may be requiredFHA requires a permanently installed heating system that provides adequate, safe heat for healthful and comfortable living conditions and protects applicable building components from freezing.
Nonfunctional heat can be an MPR issueThe plumbing system must provide adequate water pressure, flow and waste removal. Readily observable leaks, damaged systems, inadequate hot water or signs of septic-system failure can require action.
Repair or further inspection may be requiredFor improvements built before 1978, defective paint receives special attention under FHA's lead-based paint requirements. This includes cracking, scaling, chipping, peeling or loose paint.
Pre-1978 defective paint generally requires repairExcessive dampness, leakage, standing water, water staining, insufficient ventilation or indications such as a mold odor can trigger repair or further qualified inspection.
Cause and severity matterEvidence or notification of infestation, including prior treatment, can cause the appraisal to be made subject to inspection by a qualified pest-control specialist.
Inspection and treatment may be neededThe FHA appraiser may report a condition without that condition automatically becoming a required repair. Depending on what is observed, the result can be an as-is appraisal, a repair condition, or additional inspection by a qualified specialist.
FHA property review is condition-specific. A visible defect can have different outcomes depending on its severity, location, effect on the property and whether the appraiser can determine compliance without additional expertise. The mortgagee ultimately determines which repairs are required.
An FHA-financed home does not have to be new, recently remodeled or cosmetically perfect. FHA allows an existing property to be appraised as-is when minor deficiencies do not affect occupant health and safety or the security and soundness of the property.
Existing homes often have deferred maintenance, worn finishes and minor imperfections. FHA's Handbook specifically recognizes that these conditions can exist without requiring repair. Cosmetic or minor repairs are not required when the condition does not create the type of health, safety, security or soundness concern FHA is addressing.
A missing handrail may be considered cosmetic when it does not pose a safety threat. A condition that does create a fall hazard may be treated differently.
FHA specifically gives holes in window screens as an example of a cosmetic condition that does not automatically require repair.
Cracked window glass is listed among FHA's cosmetic-repair examples when the condition does not create a material health or safety concern.
FHA lists defective interior paint surfaces in housing constructed after 1978 as a possible cosmetic condition. This should not be confused with FHA's separate defective-paint rules for pre-1978 properties.
FHA gives a dripping faucet that does not cause damage as an example of a minor plumbing condition that may not require repair.
Other inoperable or damaged components may also be treated as cosmetic when, in the appraiser's professional judgment, they do not pose a health or safety issue.
FHA tells the appraiser that when an element is functioning well and has not reached the end of its useful life, replacement should not be recommended simply because the component is old. FHA property review is based on condition and acceptability—not a requirement that every component be new.
The condition reflects ordinary wear or deferred maintenance but does not materially affect occupant health and safety or property security and soundness.
Context matters. For example, a missing handrail that does not create a safety threat may be cosmetic, while a condition that creates a material fall hazard may require a different appraisal or lender response.
Cosmetic and minor deficiencies still must be reported and considered in the appraiser's overall condition rating and value analysis. “No repair required” and “the condition does not matter” are not the same thing.
FHA determines whether a property condition must be addressed for the loan to move forward, but FHA does not create a blanket rule saying the seller must pay for every required repair. The actual arrangement depends on the transaction, the purchase agreement and lender approval.
FHA's property rules determine whether a condition needs to be corrected. The parties still have to determine who will complete the work, how it will be paid for and whether the proposed arrangement is acceptable to the lender.
In many purchase transactions, the seller agrees to complete the FHA-required repair before closing. This can be the simplest path when the seller has access to the property and the work can be completed within the contract timeline.
A transaction may involve another documented repair arrangement, but it should be discussed with the lender before anyone spends money or performs work. Contract terms, property ownership, lender requirements and closing timing can all affect what is acceptable.
FHA permits a mortgagee to establish a repair escrow in certain situations when repairs cannot be completed before closing, provided the home is habitable and safe for occupancy at closing. Repair escrow availability is not automatic.
Trying to negotiate cost before understanding the actual FHA requirement can create unnecessary conflict. First determine what the lender requires, then structure the repair solution around the contract and closing timeline.
A seller simply giving the buyer money for future repairs is not the same thing as completing an FHA-required repair. FHA specifically identifies repair allowances as an inducement to purchase, which can affect the Adjusted Value used for FHA loan-to-value calculations. Any proposed credit or allowance should be reviewed with the lender before it is written into the transaction.
The best repair solution depends on more than cost. Timing, access, appraisal conditions and lender documentation can matter just as much as who writes the check.
In most straightforward FHA purchase transactions, required repairs are resolved before the loan closes. But FHA provides a limited path for certain existing properties when the repair cannot be completed before closing and the mortgagee approves a repair-completion escrow.
When repairs are required to bring an existing property into compliance with FHA property requirements, the normal path is to complete them before closing. If the repairs cannot be completed in time, the mortgagee may establish a repair escrow when FHA's conditions are satisfied.
When the work can reasonably be completed, the simplest path is to finish the required repair, obtain any necessary documentation or reinspection, and satisfy the lender's appraisal condition before the loan closes.
Most straightforward transactionFor existing construction, FHA permits the mortgagee to establish an escrow when required repairs cannot be completed before closing. The lender—not the buyer, seller or agent—determines whether this option is available for the transaction.
Lender approval requiredA repair escrow is not a way to close on a property with unresolved conditions that make it unsafe to occupy. FHA permits the mortgagee to establish the escrow only when the housing is habitable and safe for occupancy at the time of loan closing.
The repair itself is only one part of the decision. The lender also has to determine how the appraisal condition will be satisfied before the FHA transaction can move forward.
The appraisal or qualified inspection indicates that corrective action is required.
Complete the repair before closing or determine whether FHA repair-escrow requirements can be met.
The repair is completed or an acceptable repair escrow is established under the lender's FHA process.
FHA permits repair escrows, but the mortgagee must agree to establish one and the transaction must satisfy FHA's repair-completion escrow requirements. If a repair issue appears, discuss the condition with the lender before changing closing dates, promising post-closing repairs or assuming the work can simply be deferred.
A repair escrow can allow certain unfinished repairs to be completed after closing, but it is a lender-administered FHA completion process—not simply money given to the buyer to fix the property later.
FHA permits the mortgagee to establish a repair-completion escrow for incomplete construction, alterations or repairs that cannot be completed before loan closing. The lender holds sufficient funds for the work and tracks the repair through satisfactory completion.
The repair-completion escrow is designed for incomplete construction, alterations or repairs that cannot be completed before loan closing.
FHA requires the housing to be habitable and safe for occupancy at the time of closing. A repair escrow does not override that standard.
FHA requires the escrowed funds to be sufficient to cover the cost of the repairs or improvements. The lender determines the documentation needed to establish that amount.
FHA specifically states that the cost of borrower labor may not be included in the repair-escrow account. This is not a standard “DIY repair fund.”
Exact procedures can vary by mortgagee, but FHA's framework requires the escrow to be established, the work to be completed satisfactorily and the escrow to be formally closed out.
The appraisal, inspection or lender review establishes the outstanding repair requirement.
The lender documents the repair escrow and sets aside sufficient funds for the approved work.
After closing, the approved repair or improvement is completed according to the lender's requirements.
The mortgagee documents satisfactory completion and closes out the repair escrow under FHA procedures.
The repair escrow exists to complete an identified repair or improvement under the mortgagee's FHA process. It should not be treated like unrestricted cash, a general remodeling allowance or a way to ignore an unresolved property problem.
FHA requires the mortgagee to execute HUD-92300, Mortgagee's Assurance of Completion, when the repair escrow is established. The mortgagee also certifies satisfactory completion on HUD-92051, Compliance Inspection Report, and completes FHA's escrow closeout process after the escrow account is closed.
Completing the physical work is only part of the process. The lender must also obtain the documentation needed to confirm that the appraisal or property condition has been satisfactorily resolved.
Depending on the appraisal condition and type of repair, completion may be documented through an approved inspection, an appraisal completion report or other applicable documentation. The lender determines what is needed to clear the property condition for the FHA transaction.
The repair itself does not automatically clear an appraisal condition. The lender must receive the applicable evidence that the required work has been satisfactorily completed.
The party responsible for the work completes the repair required by the transaction.
The lender obtains the inspection, appraisal completion report or other documentation required for that condition.
Once satisfactory evidence is received, the lender can determine that the repair condition has been resolved.
No—not necessarily. FHA recognizes more than one form of completion documentation. Which method applies depends on the property condition, the appraisal requirement and the lender's FHA process.
When applicable, the mortgagee confirms that the HUD-92051 is completed, signed and dated by an approved inspector. FHA also permits a local government inspection with underwriter certification in applicable circumstances.
When an appraisal completion report is used, Part B must be completed, signed and dated by an FHA appraiser in good standing on the FHA Appraiser Roster.
Not every FHA condition is cleared by the same document. The original issue determines what evidence the lender may need before the condition can be considered resolved.
FHA requires the mortgagee to certify that the incomplete construction, alterations or repairs were satisfactorily completed. After the repair escrow account is closed, the mortgagee must also complete FHA's Escrow Closeout Certification in FHA Connection within 30 days after the escrow account is closed.
Do not assume that every repair requires the same inspection or completion form. The lender should identify the documentation required to clear the specific appraisal condition. That can help avoid unnecessary inspections, duplicate work and last-minute closing delays.
FHA repair questions are rarely as simple as “pass” or “fail.” These answers explain some of the most common repair issues for Utah buyers, sellers and real estate professionals while keeping the appraiser's role, FHA requirements and lender decision separate.
FHA directs the appraiser to limit required repairs to those necessary to maintain the property's safety, security and soundness, preserve continued marketability, and protect occupant health and safety.
The mortgagee ultimately determines which repairs are required for the FHA transaction.
FHA's repair requirements do not establish a universal rule saying that the seller must pay every FHA-required repair. Who completes and pays for the work is a transaction and contract issue that also has to be acceptable to the lender.
In many purchase transactions the seller completes the repair, but the parties should confirm the proposed arrangement with the lender before work begins.
No. FHA specifically lists a missing handrail that does not pose a safety threat as an example of a cosmetic condition that may not require repair.
The important issue is whether the actual condition creates a material safety concern—not simply whether a handrail is missing.
Not simply because of age. FHA tells the appraiser not to recommend replacement of a functioning component merely because it is older.
For roofs specifically, when the appraiser determines that the roof has less than two years of remaining physical life, the appraisal must be made subject to inspection by a professional roofer.
Sometimes. For existing construction, FHA permits the mortgagee to establish a repair escrow when applicable repairs cannot be completed before closing.
The property must still be habitable and safe for occupancy at closing, and the lender must agree to establish and administer the repair escrow.
FHA states that the cost of borrower labor may not be included in the repair-escrow account. The escrow funds also must be sufficient to cover the cost of the approved repairs or improvements.
Not necessarily. FHA recognizes different forms of completion documentation. Depending on the condition, the lender may use an applicable HUD-92051 Compliance Inspection Report or Part B of the Fannie Mae Form 1004D/Freddie Mac Form 442.
The lender should identify the completion documentation needed for the specific appraisal condition.
The answer depends in part on the age and location of the defective paint. Properties and related improvements built before 1978 are subject to FHA's lead-based paint requirements.
For post-1978 housing, FHA separately addresses defective exterior paint that exposes the subsurface to the elements, while some defective interior paint may be treated as a cosmetic condition.
Yes. If the appraiser cannot determine whether a property meets FHA Minimum Property Requirements or Minimum Property Standards, an inspection by a qualified individual or entity may be required.
Examples can include structural concerns, mechanical-system deficiencies, moisture conditions or evidence of wood-destroying pests.
FHA does not reduce property eligibility to a simple universal list where every visible defect automatically means “fail.” FHA's Handbook sets property requirements and appraisal protocols, and the nature, severity and effect of the actual condition determine how it is handled.
For a broader property review, see our FHA Property Requirements in Utah guide .
This guide describes FHA's baseline property and repair guidance. An FHA-approved lender or investor may have additional requirements or operational restrictions, particularly for repair escrows, inspections and completion documentation. Final eligibility depends on the actual appraisal, property condition, loan file and lender review.
FHA financing can work with many existing homes that are not perfect. The important part is understanding what the appraisal actually requires, what may be acceptable as-is and how the condition fits the loan before making major decisions about the transaction.
Use these guides to understand the broader FHA property, qualification and purchase process.
Primary FHA policy source: FHA Single Family Housing Policy Handbook 4000.1. Guideline content on this page was reviewed against the Handbook revision dated August 12, 2026.
View HUD HandbookThis page is for educational purposes and is not a commitment to lend or a final underwriting decision. FHA requirements, appraisal findings, property conditions, lender overlays and loan-specific circumstances may affect eligibility. Final approval is subject to the lender's underwriting review, applicable FHA requirements and required documentation. Victor Emmel, NMLS #133605 · Coast2Coast Mortgage, LLC, NMLS #376205 · Equal Housing Lender.