A home financed with an FHA or VA loan has to pass a government-set condition check before the mortgage can close. FHA calls its list Minimum Property Standards and the VA calls its version Minimum Property Requirements, but the FHA and VA minimum property standards work the same way in practice: an appraiser walks the property, measures it against a specific checklist covering safety, structural soundness, sanitation, and site conditions, and flags anything that falls short.1U.S. Department of Housing and Urban Development. Minimum Property Standards Resources If the report comes back “subject to” repairs, the loan is on hold until those items are fixed and re-inspected. The rules protect the buyer from inheriting hidden hazards and protect the government from insuring a loan on a deteriorating asset.
What the Appraiser Is Actually Checking
The checklist covers three broad areas: the home’s mechanical and safety systems, its physical shell, and the site around it. Any single failure can hold up closing.
Heating, Electrical, Water, and Waste
The heating system has to warm all living areas and any spaces containing plumbing to at least 50 degrees Fahrenheit, mainly so pipes don’t freeze.2U.S. Department of Veterans Affairs. VA Basic MPR Checklist A wood stove alone won’t satisfy this; a permanently installed conventional system also has to be present. In warm climates the 50-degree rule is a non-issue, but the heating source still has to keep the home comfortable. VA appraisers take a closer look at unvented space heaters because of carbon monoxide risk.
The electrical system has to be safe and sized for the home. Appraisers look for exposed wiring, frayed insulation, improper grounding, and panel work that looks amateur. Older wiring types don’t automatically fail, but visible hazards do.
Every home needs a continuous supply of safe drinking and hot water, plus a sewage system that doesn’t leak. On properties with a private well and septic, FHA wants at least 100 feet between the well and the septic drain field, and at least 10 feet between the well and any property line. Where local code allows a shorter setback, FHA will accept it, provided the well-to-drain-field distance is never less than 75 feet.3U.S. Department of Housing and Urban Development. Minimum Distance Requirements Between Private Wells and Sources of Pollution Shared wells are allowed under both programs if a written agreement covers maintenance and access.
Smoke Alarms, CO Detectors, and Lead Paint
Working smoke alarms are required inside each bedroom, outside each sleeping area, and on every level of the home including the basement. They have to sound when tested and cannot be taped over or painted shut. Carbon monoxide detectors are required where there are fuel-burning appliances, fireplaces, or attached garages. Stricter local codes control if they go further.
Homes built before 1978 get an extra layer of scrutiny. The appraiser visually assesses every painted surface, and any chipping, peeling, or flaking paint has to be stabilized before closing.4U.S. Department of Veterans Affairs. Circular 26-16-37 – Requirements for Notification, Evaluation, and Reduction of Lead-Based Paint Hazards Stabilization means scraping the deteriorated paint, repainting the surface, and passing a clearance exam that confirms no lead dust remains. The buyer also gets a disclosure and a 10-day window to order their own lead inspection at their expense before the contract binds. The visual condition alone triggers the repair; it doesn’t matter whether the paint actually tests positive for lead.
Roof, Foundation, Attic, and Crawl Space
The roof needs at least two years of remaining useful life and no active leaks, holes, or significant missing material.5U.S. Department of Housing and Urban Development. HOC Reference Guide – Roofs and Attics Patchy repairs and normal wear are fine as long as the roof is still doing its job. The foundation must be stable, with no significant cracking, shifting, or moisture problems that suggest structural damage.
Attics and crawl spaces need adequate ventilation to prevent moisture, rot, and mold. The appraiser has to be able to get physical access to both areas. They look for water intrusion, damaged structural members, standing water, and debris. Crawl spaces must be clear of trash, properly vented, and have enough clearance for maintenance access.2U.S. Department of Veterans Affairs. VA Basic MPR Checklist
Site, Access, and Environmental Hazards
The property has to have legal and physical access from a public or private street with an all-weather surface such as asphalt or gravel. Private roads need a recorded easement or joint maintenance agreement. Utilities have to serve the property directly; shared water, gas, or electric service requires a formal written agreement.
A property too close to high-voltage lines, high-pressure gas pipelines, or inside certain airport noise zones can be ruled ineligible outright. Encroachments where a neighbor’s structure crosses the boundary get flagged because they raise title concerns. Any nonresidential use of the property has to stay secondary to the residential use and cannot exceed 25 percent of the total floor area.2U.S. Department of Veterans Affairs. VA Basic MPR Checklist
If any part of the home falls inside a FEMA Special Flood Hazard Area (zones starting with “A” or “V”), federal law prohibits the lender from making the loan without flood insurance carried for the full loan term.6Office of the Law Revision Counsel. 42 USC 4012a – Flood Insurance Purchase and Compliance Requirements Coverage has to equal the lesser of replacement cost, unpaid loan balance, or the National Flood Insurance Program cap, which for residential buildings is $250,000.7National Flood Insurance Program. Types of Flood Insurance Coverage Private policies work if they match those terms. A community that doesn’t participate in the NFIP at all generally can’t be financed with a government-backed loan.
Where FHA and VA Rules Diverge
Most of the checklist is functionally the same across both programs. A handful of items are not, and they catch buyers off guard.
Termite Inspection
VA loans require a wood-destroying pest inspection whenever the property sits in an area rated moderate-to-heavy or very heavy on the federal Termite Infestation Probability Map.8U.S. Department of Veterans Affairs. VA Circular 26-22-11 – Pest Inspection Fees and Repair Costs The report has to confirm no active infestation and no significant past damage. A professional inspection typically runs $75 to $325. FHA doesn’t require a termite report in every case; the appraiser can order one only when they see evidence of infestation during the visit.
Manufactured Homes
A manufactured home has to sit on a permanent foundation certified by a licensed professional engineer or registered architect as meeting HUD’s Permanent Foundations Guide (HUD-4930.3G).9U.S. Department of Housing and Urban Development. HOC Reference Guide – Manufactured Homes Foundation Compliance The certification has to be site-specific, signed and sealed, and produced by someone licensed in the state where the home sits. Without it, the loan won’t close. The one exception is an FHA-to-FHA refinance where the foundation and structure have not been altered since the original certification.
Condominium Projects
For an FHA-financed condo, the project itself has to be on HUD’s approved list or the unit has to qualify for Single-Unit Approval.10U.S. Department of Housing and Urban Development. FHA Condominiums VA maintains its own separate approved condo list, and any project not on it needs a review before the loan can move forward. If you’re buying a condo, confirm the project’s status early; a unit that looks perfect can still be unfinanceable because of what the project as a whole is or isn’t doing.
What Happens When the Home Doesn’t Pass
If the report is marked subject to repairs, the loan is stuck until those items are resolved and verified. There are three main paths forward.
Seller Repairs Before Closing
The cleanest option is for the seller to complete the fixes, then have the appraiser or another qualified inspector return to confirm the work. The re-inspection fee typically runs $100 to $200 and lands on the buyer. Common items include stabilizing deteriorated paint on pre-1978 homes, patching roof leaks, installing handrails on stairs, and fixing exposed wiring. FHA generally allows up to 120 days from the appraisal effective date to finish repairs.
Escrow Holdback
When weather or timing blocks the work from finishing before closing, an escrow holdback can bridge the gap. The lender holds funds back, the buyer closes, and specific repairs get finished within a set window afterward. FHA’s standard 203(b) program allows this for relatively minor items, with the held amount based on the repair cost plus a contingency. The scope is limited to what the minimum property standards require, not general upgrades.
FHA 203(k) for Bigger Jobs
When repairs go beyond minor items, the FHA 203(k) program lets the buyer roll them into the mortgage. The Limited 203(k) covers up to $75,000 in non-structural work like flooring, appliances, or paint stabilization.11U.S. Department of Housing and Urban Development. 203(k) Rehabilitation Mortgage Insurance Program Types The Standard 203(k) handles larger projects with a minimum repair cost of $5,000 and no fixed dollar cap beyond the area’s FHA mortgage limit; it requires a HUD-approved consultant. There is no VA equivalent, so a veteran looking at a property that needs substantial work has fewer built-in options.
What Happens When the Value Comes In Low
A low appraisal is separate from a failed condition inspection, but both programs give the buyer protection.
Every VA purchase contract must contain the VA escape clause, which says the buyer cannot be forced to close or forfeit earnest money if the appraised value falls short of the contract price.12U.S. Department of Veterans Affairs. VA Escape Clause The buyer can still choose to bring cash to cover the gap. FHA follows the same practical rule: the loan amount is based on the lower of the appraised value or the purchase price.
Before a VA appraiser formally submits a value below the contract price, they have to trigger the Tidewater process, notifying the lender’s point of contact and giving them two business days to submit additional comparable sales that might support a higher value.13U.S. Department of Veterans Affairs. Circular 26-17-18 – Procedures for Improving Communication With Fee Appraisers in Regards to the Tidewater Process The comparables have to be presented in a format similar to the sales grid on a standard appraisal, with verification that the sales actually closed. If the appraiser isn’t persuaded, the report goes out at the lower value with an addendum explaining why.
After the report is issued, either program allows a formal challenge. Under FHA’s current policy (effective March 2025), the reconsideration of value request has to come from the underwriter, not the borrower, and is limited to relevant data the appraiser overlooked that existed on the effective date of the appraisal.14U.S. Department of Housing and Urban Development. Mortgagee Letter 2025-08 – Rescinding Multiple Appraisal Policy Related Mortgagee Letters The appraiser may charge a fee for the review, but the borrower cannot be billed if the missing data wasn’t their fault. For VA, the buyer asks the lender to route a reconsideration request with supporting comparables. Either way, the strength of the challenge depends entirely on the comparables you bring.
Who Orders the Appraisal, What It Costs, and How Long It Lasts
The lender orders the appraisal, not the buyer, and the two programs diverge on assignment.
For VA loans, the VA assigns the appraiser through a rotational system, so neither the lender nor the buyer picks. The VA sets maximum appraisal fees by state and county; as of the May 2026 schedule, single-family appraisals run $650 to $1,100 in most states, with outliers like Alaska reaching $1,500.15U.S. Department of Veterans Affairs. VA Appraisal Fees and Timeliness Table The VA also publishes turnaround deadlines by state and county, with the clock starting the first business day after assignment; weekends and federal holidays don’t count.16U.S. Department of Veterans Affairs. VA Appraisal Fee Schedules and Timeliness Requirements
FHA works differently. The lender picks the appraiser, typically through an appraisal management company. FHA doesn’t publish a fixed fee schedule; costs generally run $400 to $700 for a standard single-family, varying by market. Most FHA appraisals finish within one to three weeks of assignment.
An FHA appraisal is valid for 180 days from the effective date, extendable to one year through an appraisal update the lender requests.17U.S. Department of Housing and Urban Development. FHA Implements Revised Appraisal Validity Period Guidance VA appraisals are valid for six months on existing homes and 12 months on new construction.18U.S. Department of Veterans Affairs. Credit Standards – VA Home Loans One quirk of FHA worth knowing: the appraisal follows the property, not the buyer. If your deal falls through, the next FHA buyer on that same home within the validity window will likely inherit your appraisal rather than order a fresh one.