What Will Not Pass an FHA Inspection?

An FHA loan, backed by the Federal Housing Administration, helps prospective homeowners purchase properties with more flexible lending requirements. These loans are designed to make homeownership accessible, but they come with specific property standards intended to ensure the home is safe, sound, and secure for its occupants. An FHA appraisal goes beyond a typical market valuation; it also assesses the property’s condition against these minimum property requirements. This assessment ensures the home meets basic health and safety standards and is structurally sound. The presence of certain conditions can prevent a property from meeting these FHA requirements, thereby jeopardizing loan approval.

Structural and Exterior Issues

Significant issues with a home’s foundation often lead to an FHA inspection failure. This includes large cracks, evidence of shifting, or walls that show signs of bowing, all of which suggest underlying structural instability. Active water intrusion into basements or crawl spaces, indicating a compromised foundation or severe drainage problems, also causes a failure. The foundation must be properly graded and have sufficient drainage to prevent water damage.

The roof’s condition is an exterior element. FHA guidelines consider active leaks or clear evidence of past significant leaks as unacceptable. Major damage, such as large holes, widespread missing shingles, or a roof that is visibly deteriorated and has less than two years of useful life remaining, will also result in a failed inspection.

Exterior walls and siding must be in good repair to protect the home from the elements. Extensive damage, rot, crumbling masonry, or missing siding that compromises the building’s weatherproofing or structural integrity will be flagged. Similarly, improper drainage and grading around the foundation, which directs water toward the house rather than away from it, leads to moisture issues and potential structural damage.

Windows and doors must be functional and maintain the home’s security and weatherproofing. Broken panes, non-functional windows or doors, or significantly deteriorated frames that allow water or drafts to enter the home are grounds for failure. Porches, decks, and steps must be safe, meaning missing railings, loose steps, or any signs of structural instability will require correction before FHA approval.

Interior and Mechanical System Issues

Problems within the home’s plumbing system can prevent FHA loan approval. Active leaks, non-functional fixtures like toilets, sinks, or showers, or significant corrosion indicating widespread issues are flagged. Low water pressure throughout the home that points to major underlying plumbing problems also requires repair.

The electrical system must be safe and fully functional. Exposed or frayed wiring, non-functional outlets or switches in areas, or evidence of overloaded panels can pose fire hazards and will cause a failure. While general outdated wiring may be acceptable, any immediate safety concerns must be addressed.

A working heating, ventilation, and air conditioning (HVAC) system is required for FHA approval, especially a functional heating system. Significant safety concerns with furnaces, such as a cracked heat exchanger or improper venting, are issues.

Water heaters must be in proper working order and safely installed. Leaks, improper installation, or dangerous venting can lead to an inspection failure. Interior surfaces with extensive water damage on ceilings, walls, or floors, large holes, or unstable flooring materials indicate neglect or underlying issues that must be remediated.

Stairs and handrails must meet safety standards, especially on stairs with three or more risers where missing or loose handrails are common failure points. Unsafe stair treads, such as those that are loose, broken, or excessively worn, also pose a safety risk. Basic functionality of kitchen and bathroom fixtures, including working stoves, sinks, and toilets, is expected for habitability.

Health and Safety Hazards

Peeling, chipping, or deteriorated lead-based paint in homes built before 1978 is a health hazard and a failure point for FHA inspections. This is particularly true for paint on friction or impact surfaces like windows, doors, and railings, where it can easily become airborne. FHA requirements mandate that such paint be stabilized or abated to eliminate the hazard before loan approval.

Visible, active mold growth or clear evidence of water intrusion that could lead to mold or structural damage will also cause an FHA inspection to fail. Active infestations of wood-destroying organisms such as termites or carpenter ants, especially if they have caused structural damage, are unacceptable. These pest issues must be remediated, and any resulting structural damage repaired.

While the mere presence of asbestos is not always a failure point, it becomes a concern if it is friable (easily crumbled) and disturbed, posing an immediate hazard. Missing or non-functional smoke and carbon monoxide detectors in required locations throughout the home are also immediate safety concerns that must be corrected. Environmental hazards observed on-site, such as contaminated soil that presents an immediate risk, are also grounds for failure. Any other condition that represents a clear and present danger to life or health, including exposed electrical wires, trip hazards, or unsecured swimming pools, must be resolved.

The Reinspection Process

After an FHA appraisal identifies property deficiencies, the appraiser will detail these required repairs, often referred to as “conditions.” These items must be fully addressed and verified before the FHA loan can proceed to closing. The property owner or seller arranges for these repairs, which need to be completed by qualified professionals to ensure they meet FHA standards.

The responsibility for paying for these required repairs is a point of negotiation between the buyer and the seller as part of the purchase agreement. Once the repairs are reported as complete, a reinspection must be scheduled with the FHA appraiser or a designated inspector. This follow-up visit serves to verify that all listed conditions have been satisfactorily remediated.

During the reinspection, the appraiser will confirm the repairs meet FHA minimum property requirements. Providing appropriate documentation, such as receipts for materials or permits for certain work, can be helpful during this verification process. If all conditions are met and verified, the appraiser will issue a final approval.

If some repairs are still incomplete or unsatisfactory, further remediation and another reinspection is necessary, which can impact the overall closing timeline. The entire repair and reinspection process can add several weeks to the loan closing, depending on the extent of the issues and the availability of contractors. This period accounts for the time needed to complete the work and schedule the appraiser’s return visit.