Are FHA Inspections Hard to Pass?

When considering a home purchase using a Federal Housing Administration (FHA) loan, understanding the FHA inspection process is an important step. This assessment, carried out by an FHA-approved appraiser, differs from a standard home inspection. Its primary objective is to confirm the property meets minimum health, safety, and structural soundness standards required for loan approval. The FHA inspection is an evaluation against specific minimum property requirements to ensure the dwelling is habitable and safe for the borrower.

Understanding FHA Inspection Objectives

The core objective of an FHA inspection is to protect both the lender and the borrower by ensuring the property serves as sound collateral and provides a safe living environment. FHA appraisers primarily look for defects that fall into broad categories: health hazards, safety hazards, and structural soundness issues. For example, exposed electrical wiring poses a clear safety hazard, while the presence of peeling lead-based paint in older homes represents a health hazard. Severely damaged foundations or roofs with inadequate remaining life are concerns related to structural integrity. These evaluations confirm the home meets essential livability standards before FHA financing can proceed.

FHA Minimum Property Standards

Properties financed with an FHA loan must meet specific minimum property standards (MPS) set by the Department of Housing and Urban Development (HUD). These standards focus on the home’s functionality and habitability rather than cosmetic appeal. Regarding safety and security, requirements include functioning doors and windows that secure entry points, and the absence of physical hazards like trip hazards or exposed electrical wires.

Health and sanitation standards mandate an adequate water supply, functional plumbing, and proper sewage disposal. The absence of hazardous materials, such as active mold or lead-based paint hazards, is also checked, along with proper ventilation. Structural soundness criteria encompass a stable foundation, a roof with sufficient remaining useful life, and functional heating and cooling systems. Furthermore, site and neighborhood conditions are considered, including requirements for proper drainage, adequate access, and general conformity with the surrounding neighborhood.

Common Issues Identified During FHA Inspections

Properties can encounter various deficiencies during an FHA inspection that may prevent loan approval until corrected. Roofing problems are frequently cited, including active leaks, significant damage, or a roof nearing the end of its useful life, typically less than two years remaining. Water damage, indicated by active leaks, standing water, or signs of past significant intrusion like damaged ceilings or walls, often requires repair. Electrical issues, such as exposed wiring or non-functioning outlets, are common safety concerns that must be addressed. Similarly, plumbing problems like leaking pipes, non-functional fixtures, or inadequate water pressure can lead to a failed inspection.

Structural concerns, including cracks in the foundation, sagging floors, or significant wood rot, indicate underlying issues that need resolution. Safety hazards like missing handrails on stairs, broken windows, or lack of proper egress from bedrooms are also routinely identified. Evidence of active pest infestations, particularly wood-destroying organisms like termites, can be a deal-breaker. For homes built before 1978, chipping or peeling paint is a significant concern due to potential lead-based paint hazards, requiring remediation.

Addressing FHA Inspection Findings

Should an FHA appraiser identify deficiencies, these findings will be noted in the appraisal report. Specific repairs are often required to bring the property into compliance with FHA minimum property standards. These necessary corrections, particularly those related to health, safety, or structural soundness, must be completed before the FHA loan can close. Once repairs are finished, a re-inspection by the FHA appraiser is necessary to verify satisfactory completion. If the repairs are not satisfactory, further remediation may be required, potentially delaying the loan process.

The timeline for completing repairs and scheduling re-inspections can vary, depending on the extent of the work needed and the availability of contractors. If identified repairs are extensive or costly, the buyer and seller may need to negotiate who will bear the expense. Options include the seller completing the repairs, a price reduction for the buyer to undertake the work, or the buyer may decide to walk away from the transaction if issues are too substantial. An FHA 203(k) loan is an option for properties requiring more significant repairs, allowing the borrower to finance both the purchase and renovation.