FHA Minimum Property Requirements (MPR): Appraisal and Repairs

For the FHA to insure a mortgage on a home, the property has to meet HUD’s minimum property requirements, a set of condition standards built around three ideas: the home must be safe for its occupants, structurally sound, and secure enough to protect the investment behind the loan. If the FHA appraiser finds a problem, the appraisal is issued “subject to” repairs, and those repairs have to be completed and verified before the loan can close. There is no general “as-is” waiver.

The rules for existing homes live in the FHA Single Family Housing Policy Handbook (Handbook 4000.1), with the core acceptability criteria in Section II.A.3.a and the property analysis categories in Section II.D.6.¹ They are separate from the older Minimum Property Standards in HUD Handbook 4910.1, which govern new construction under other HUD housing programs.²

What the FHA Appraiser Checks

An FHA-approved appraiser performs a visual walkthrough of the interior and exterior and notes any readily observable conditions that affect safety, sanitation, or structural soundness.³ The categories they look at include:

Structural conditions. Foundations, walls, floors, and ceilings are examined for significant cracks, signs of settlement, or water damage.
Roof. It must have a remaining physical life of at least two years. If it doesn’t, the appraiser has to call for repair or replacement and specify which.⁴
Heating and electrical. The heating system must be capable of maintaining at least 50 degrees Fahrenheit. Electrical systems must be safe and functional, with no exposed wiring.³
Plumbing and water. The home needs an adequate supply of potable water and a working sanitary waste system.
Safety hazards. Missing handrails, broken windows or doors, damaged steps, and hazardous site conditions get flagged.
Access. The property must have safe pedestrian and vehicle access from a public street, and the appraiser must be able to reach the attic and crawl spaces.

When something fails, the property isn’t automatically rejected. The appraisal is conditioned on the fix.⁵ An FHA appraisal, once issued, is valid for 180 days.⁶

What the Appraisal Is Not

An FHA appraisal is not a home inspection. The appraiser is limited to what’s visible without moving furniture, running diagnostics, or using specialized equipment. HUD itself acknowledges that many of the handbook’s technical requirements are “beyond the expertise of the appraiser.”³ If a septic system or well shows signs of failure, the appraiser flags it and calls for a professional inspection rather than evaluating it personally. The appraisal also establishes market value using comparable sales, which protects the lender from over-lending.⁶ A separate home inspection is a good idea, but it isn’t part of the FHA process.

Deficiencies That Most Often Stall an FHA Deal

A handful of issues come up over and over in FHA appraisals:

Peeling, chipping, or flaking paint on homes built before 1978. Because of lead-based paint risk, any deteriorating paint on a pre-1978 home has to be scraped and repainted safely before closing.⁵
Roof problems. Active leaks, missing shingles, or a roof with less than two years of remaining life will trigger a repair-or-replace condition.⁴
Missing or damaged handrails and steps.
Non-functional plumbing or heating. A furnace that doesn’t work or plumbing that can’t deliver safe water is a hard fail.
Water in basements or crawl spaces. Standing water, excessive moisture, or evidence of infiltration below grade must be resolved.
Exposed electrical wiring that presents a shock or fire hazard.

Active mold, termite infestations, and significant pest damage will also stop the process.⁷

Wells, Septic, and Water Supply

Properties on private wells and septic get extra scrutiny. HUD’s guideline is that a home should be connected to public water and sewer where available, unless connection would cost more than three percent of the property’s estimated value.⁸

Where a well is used, the FHA sets minimum distances between the well and contamination sources. For new construction, the well must sit at least 50 feet from a septic tank, 100 feet from a drain field or seepage pit, and 10 feet from watertight sewer lines. For existing homes, local distance rules that are less stringent than FHA’s can still be acceptable if the property complies with state and local requirements and the loan file documents it.⁸

Water quality testing isn’t automatic. It’s required when a state or local jurisdiction mandates it, when there’s reason to suspect contamination, or when the water supply relies on a purification device. When testing happens, the water has to meet local health authority standards, or EPA maximum contaminant levels if local standards don’t exist.⁸ The appraiser will also look at any septic system for surface signs of failure and can require a professional inspection if something looks off.⁹

Property Types With Extra Rules

The general MPR framework applies broadly, but some property categories carry their own conditions.

Manufactured homes must bear a HUD Certification label showing they were built on or after June 15, 1976. The home has to be permanently affixed to a foundation that complies with HUD’s Permanent Foundations Guide for Manufactured Housing, classified as real property with the motor vehicle title surrendered, and stripped of towing hitches, wheels, and axles. A continuous perimeter enclosure is required, and any structural modifications need certification from a licensed structural engineer or a local jurisdiction inspection. Homes that have been moved from an earlier installation site are generally ineligible.¹⁰

Condominiums must be in an FHA-approved project listed in the FHA Condominium Registry before a case number can even be assigned. Condo hotels and manufactured home condominiums are ineligible.¹⁰

FHA will insure up to four dwelling units if the borrower occupies one and certifies that no unit will be rented out on stays under 30 days. Mixed-use properties can qualify if at least 51 percent of the total square footage is residential and the commercial use doesn’t affect occupant health and safety.¹⁰

Fixing the Problems and Getting to Close

When the appraiser conditions the report on repairs, the lender receives a list of items to correct. Who pays is negotiable between buyer and seller, but the work usually falls to the seller. Once the repairs are done, someone has to verify them before the loan can close.

Verification can be handled by a licensed engineer, a licensed home inspector, a registered tradesperson in the relevant field, or the original appraiser. Whoever performs it must personally sign the verification form.¹¹

Documentation depends on who signs off. Licensed professionals can use their own company forms to certify the deficiencies are corrected. Appraisers and compliance inspectors have to use the Compliance Inspection Report (Form HUD-92051), with the Direct Endorsement underwriter signing a separate section. For minor items, a simpler Mortgagee Certification can clear the condition without the full HUD-92051.¹¹

When Repairs Can’t Happen Before Closing: The 203(k) Loan

There is no general FHA workaround for a property that won’t pass MPR. If the deficiencies can’t be corrected before closing, the lender has to reject the property for standard FHA financing. The main alternative is the FHA 203(k) rehabilitation loan, which folds the purchase price and the cost of bringing the home up to standard into a single mortgage.¹²

The mechanics: one portion of the loan pays the seller at closing, and the rest goes into escrow, released in stages as repairs are completed and verified by an FHA-approved inspector. The loan is FHA-insured before the rehab work is finished, so the lender is protected while the property is still being brought up to code.¹²

Two versions exist. The Standard 203(k) is for major rehabilitation and structural work, requires a minimum of $5,000 in repairs, and requires a HUD-approved consultant to oversee the project. The Limited 203(k) covers less extensive, non-structural improvements and caps costs at a lower threshold. Work generally has to be done by licensed contractors, and the borrower must intend to live in the home.¹³

What Could Change After the 2026 Review

HUD is currently reviewing the MPR framework for the first time in more than two decades. On May 29, 2026, the agency published a Request for Information in the Federal Register under docket FR-6609-N-01, implementing a March 2026 executive order titled “Promoting Access to Mortgage Credit.”¹⁴¹⁵

HUD asked commenters whether the current requirements still adequately protect borrowers, which ones may be outdated, whether more post-closing repairs should be allowed, and whether the appraiser’s role in identifying deficiencies is still aligned with modern practice.¹⁴

The comment period closed June 29, 2026, drawing 72 responses. A coalition of financial services trade groups, including the American Bankers Association, called the current MPRs “one of the most significant impediments to the utilization of FHA financing by prospective homebuyers” and urged HUD to align FHA’s standards with the property condition rating frameworks used by Fannie Mae and Freddie Mac.¹⁵ The Mortgage Bankers Association echoed that call.¹⁶ America’s Credit Unions formally asked FHA to adopt the GSE property condition rating system.¹⁷ Whether any of this actually changes the rules depends on what HUD does next with the comments it has collected. Until then, the standards described above are the ones an FHA appraiser will apply.

1
HUD. FHA Single Family Housing Policy Handbook 4000.1
2
HUD. Minimum Property Standards
3
HUD. FHA Appraisal and Property Requirements
4
HUD Archives. HOC Reference Guide – Roof Requirements
5
FHA.com. FHA Minimum Property Requirements
6
Chase. FHA Appraisal Requirements
7
Chase. FHA Minimum Property Standards
8
HUD Archives. HOC Reference Guide – Individual Water Systems
9
FHA.com. FHA Requirements for Wells and Septic Systems
10
NewRez Correspondent. FHA Property Types Underwriting Guide
11
HUD Archives. HOC Reference Guide – Required Repairs
12
HUD. Section 203(k) Rehabilitation Mortgage Insurance Program
13
OCC. FHA 203(k) Loan Program Fact Sheet
14
Federal Register. Request for Information Regarding Single Family Minimum Property Requirements
15
American Bankers Association. Letter to FHA on Single Family MPR
16
HousingWire. HUD Seeks FHA MPR Feedback
17
America’s Credit Unions. FHA Should Align Minimum Property Requirements With Fannie, Freddie