A VA appraisal fails when the home does not meet the Department of Veterans Affairs’ Minimum Property Requirements, the safety, soundness, and sanitation standards every VA-backed property must satisfy before the loan is guaranteed. Knowing what will fail a VA appraisal comes down to a familiar set of trouble spots: the roof and structure, the heating and mechanical systems, water and sewage, deteriorated lead paint on older homes, wood-destroying insects, unsafe site conditions, and — for condos — whether the project itself is on the VA’s approved list. Any of these can stop a closing until the problem is corrected and re-inspected.
Roof and Structural Defects
The roof covering must keep moisture out and have reasonable future durability.1Department of Veterans Affairs. VA Basic MPR Checklist Most lenders read that as at least two years of remaining useful life. Missing shingles, active leaks, and ceiling stains almost always trigger a required repair.
Foundations get the same close look. Significant cracks, settling, or shifting walls point to instability, and the lender will typically require a licensed structural engineer to inspect and certify the home is sound. Basements must be dry; standing water or persistent dampness signals drainage failure that has to be corrected.
Crawl spaces and attics need accessible entry and adequate ventilation so the appraiser can inspect them and so moisture doesn’t rot the framing.1Department of Veterans Affairs. VA Basic MPR Checklist Crawl space floor joists must sit high enough above the ground to allow maintenance of ductwork and plumbing, and any ponding water or debris in the crawl space has to be cleared before re-inspection.
Heating, Electrical, and Plumbing Problems
Every area of the home containing plumbing must have a permanent heat source capable of maintaining at least 50°F. Portable space heaters and plug-in units don’t count. The heat source must be a built-in furnace, boiler, heat pump, or similar permanent installation, and it has to be operational when the appraiser arrives.
On the electrical side, appraisers flag visible fire hazards: exposed wiring, open junction boxes, missing outlet cover plates, and frayed wires. Older homes with knob-and-tube wiring can face extra scrutiny if the system can’t handle modern loads safely. The appraiser is not conducting a full home inspection; they are looking for visible defects that affect immediate safety.
Plumbing must deliver adequate water pressure to every fixture, drains must flow without backup, and the water heater has to produce hot water throughout the home.1Department of Veterans Affairs. VA Basic MPR Checklist A non-functional water heater is a guaranteed failure. Any mechanical system that is visibly broken, disconnected, or jury-rigged will need professional repair before the loan moves forward.
Water Supply and Sewage
The home must have a continuous supply of safe, potable water and functioning sanitary facilities with a safe method of sewage disposal.1Department of Veterans Affairs. VA Basic MPR Checklist Homes on municipal water and sewer rarely have problems here. Properties on private wells and septic systems get more scrutiny.
Well water generally has to be tested for bacteria (coliform), nitrates, nitrites, and lead, following local health authority guidelines. Where no local authority sets standards, the water must meet state guidelines or federal EPA standards. If the water fails, treatment or well remediation is required before closing.
Private septic systems have to function properly, meet local health authority requirements, and sit far enough from the water source to prevent contamination. Toilets must flush and drains must run without backup or leakage. A failing septic system is one of the most expensive problems to encounter, and the VA will not approve a loan on a property with non-functional sewage disposal.
Deteriorated Lead Paint on Pre-1978 Homes
Any home built before 1978 gets special handling for lead-based paint. Under 24 CFR Part 35, any surface with peeling, chipping, or flaking paint must be stabilized: loose paint removed, a new protective coating applied.2Veterans Benefits Administration. VA Circular 26-16-37 – Lead-Based Paint Requirements The rule reaches interior walls, exterior siding, window frames, outbuildings, and fences. Hairline cracks, small nicks, and nail holes don’t trigger it; deteriorated paint that could produce lead dust or chips does.
Remediation requires fixing whatever caused the paint to deteriorate — dry rot, rust, moisture damage, crumbling plaster — and then applying the new coating.2Veterans Benefits Administration. VA Circular 26-16-37 – Lead-Based Paint Requirements The appraiser re-inspects to confirm the hazard is gone. Where multiple exterior surfaces are deteriorated, professional lead-safe renovation practices apply, which pushes up both cost and timeline.
Pest Damage and Active Infestations
A wood-destroying insect inspection is required in most of the country. The VA publishes the list of states and territories where the inspection is mandatory, covering the vast majority of states along with Puerto Rico, Guam, and other territories.3U.S. Department of Veterans Affairs. Local Requirements – VA Home Loans A handful of northern states with low termite risk are exempt, though lenders in those states sometimes require the inspection anyway.
Appraisers look for active infestations of termites, carpenter ants, beetles, or other wood-destroying insects that could compromise the framing. Past damage that hasn’t been repaired also triggers a failure; the structural wood has to be sound. Any reported infestation or insect damage that affects the property’s value must be corrected before loan settlement.4Veterans Benefits Administration. LAPP Lender’s Notice of Value Exhibit
Site Access, Drainage, and Location Hazards
The property must be accessible year-round by foot or vehicle over a public or private road that holds up in all weather. Dirt roads that turn impassable in rain or snow don’t qualify. Homes on private roads need access protected by a recorded permanent easement or right-of-way, partly so emergency vehicles can always reach the property.
Grading around the foundation must carry surface water away from the home. Pooling water, marshy ground near the structure, or inadequate drainage will be flagged. Dead or dying trees that could fall on the home have to come down, and sinkholes, abandoned wells, or similar ground hazards must be filled or secured.
Location itself can be the problem. The VA generally will not guarantee a loan on a home in an airport runway clear zone because of the safety risk and the possibility of government acquisition. Homes near high-voltage power lines or high-pressure gas pipelines may have to meet specific distance requirements. When the lot itself is the issue, repair work can’t fix it.
Condo Projects That Aren’t VA-Approved
A condo purchase adds a hurdle single-family homes don’t face: the project itself must be approved by the VA before the loan can be guaranteed.5Veterans Benefits Administration. LGY Condo Approval for Lenders A unit can be in flawless condition and still fail if the association hasn’t gone through the approval process.
Buyers can check status through the VA’s online lookup tool by project name, ID number, state, or regional office.6Veterans Home Loan Guaranty Program. LGY Hub Condo Report If the project isn’t approved, the lender must submit a condominium package to the VA, which reviews the association’s financial health, insurance, owner-occupancy ratios, and governing documents. That process takes time and isn’t guaranteed to succeed, so verify approval status before going under contract.
Leased Solar Panels
Solar systems catch buyers off guard. Panels the homeowner owns outright are treated as part of the property and usually cause no trouble. Leased panels are different: they aren’t considered part of the property’s value and can complicate the appraisal.7Veterans Benefits Administration. Solar Improvements – VA Loan Guaranty Conference
Leased panels often come with a UCC-1 filing, a lien giving the solar company a security interest in the property. That lien has to be subordinated to the VA loan, meaning the solar company agrees its claim comes second to the mortgage. Some solar companies cooperate; others don’t. If the lien can’t be subordinated, the deal stalls. Ask about any solar arrangement before making an offer, and if you’re selling with leased panels, contact the solar company early to learn what subordination involves.
What Happens After a Failure
When an appraiser flags problems, the required repairs are listed on the Lender’s Notice of Value.4Veterans Benefits Administration. LAPP Lender’s Notice of Value Exhibit The repairs must be completed, and the lender, the original appraiser, or a compliance inspector must certify the work was done satisfactorily. When the appraiser returns for a re-inspection, the standard fee is $150.8U.S. Department of Veterans Affairs. VA Appraisal Fee Schedules and Timeliness Requirements
Either party can pay for the repairs; the VA doesn’t dictate who covers the cost. In practice, the buyer’s agent usually asks the seller first, and if the seller refuses, the buyer can pay out of pocket. For smaller repairs under $500, most lenders want conditional loan approval in place before work starts. For repairs above $500, lenders often wait for a clear-to-close.
When repairs can’t be finished before closing — exterior painting in freezing weather, for example — an escrow holdback is sometimes available. The buyer deposits 1.5 times the estimated repair cost, and the funds are released to pay for the work after closing. Major repairs to critical systems like the roof, foundation, plumbing, electrical, HVAC, or septic almost always must be done before closing because they directly affect the home’s safety and habitability.
Low Appraised Value Is a Different Problem
A VA appraisal can also derail a purchase by coming in below the agreed price, but that’s a value dispute rather than an MPR failure. It runs on its own track: any party to the transaction can submit a written Reconsideration of Value request through the lender, with only one request allowed per appraisal, supported by up to three comparable sales the appraiser didn’t use.9Veterans Benefits Administration. Reconsideration of Value Request Requirements Property condition problems and value disputes are handled separately, so don’t assume the two overlap.