Written by the Simply Approved Mortgages editorial team
Reviewed for program accuracy by our Simply Approved Mortgages underwriting desk — Licensed mortgage originators (NMLS) — Colorado & Florida. We summarize published federal program rules; we do not set them. This article is educational and is not a quote, approval, or commitment to lend.
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An FHA appraisal evaluates both the fair market value of a home and its compliance with minimum property standards established by the U.S. Department of Housing and Urban Development (HUD). Unlike a standard appraisal, an FHA appraiser checks for health, safety, and structural soundness. If the property has peeling lead paint, a failing roof, or non-functioning mechanical systems, the appraiser will flag those defects for mandatory repair before your loan can close.
When you finance a primary residence through an FHA 203(b) purchase loan, the property serves as collateral for an FHA-insured mortgage. Simply Approved Mortgages guides buyers across Florida and Colorado through this process, ensuring you know exactly what an appraiser expects before stepping foot on the property.
How an FHA appraisal differs from a conventional appraisal
A standard conventional appraisal focuses primarily on estimating the fair market value of the property by comparing recent neighborhood sales. While an FHA appraiser also calculates market value, they carry an additional duty: verifying that the home meets HUD's Minimum Property Standards (MPS).
Under HUD Handbook 4000.1, every home securing an FHA mortgage must be safe, sound, and secure. The appraiser performs a visual inspection of accessible areas, including attics, crawlspaces, and mechanical systems.
It is also important to recognize that an FHA appraisal is not the same as a complete home inspection. A home inspector works directly for you, performing an exhaustive deep-dive into every component of the house. An FHA appraiser assesses property health and safety on behalf of the lender and HUD. Even when an appraisal passes without conditions, obtaining an independent home inspection remains a vital consumer safeguard.
The FHA appraisal checklist: What appraisers inspect
FHA roster appraisers look at specific systems and components to confirm the home does not present immediate hazards to future occupants. Here is what they examine during their physical walk-through:
Roof and attic spaces
The roof covering must prevent moisture from entering the home and have a reasonable remaining economic life. Under HUD Handbook 4000.1, the appraiser must visually inspect the attic from at least the head and shoulders through the scuttle hole. If the roof has curled, missing, or damaged shingles, or shows evidence of active water intrusion, the appraiser flags it. HUD requires that any roof with less than two years of remaining physical life be repaired or replaced.
Exterior surfaces and paint hazards
For any home built before 1978, peeling, chipping, or flaking paint is treated as a potential lead-based paint hazard under federal law. Appraisers check all interior and exterior painted surfaces, including siding, soffits, window sills, porches, and detached garages. If defective paint is present on a pre-1978 property, HUD mandates that the surfaces be scraped, washed, and sealed with fresh paint.
Foundation and structural soundness
The foundation must be intact and capable of supporting the structure without significant settlement. Appraisers inspect exterior foundation walls, interior basements, and accessible crawlspaces. Significant stair-step cracking in masonry, bowing foundation walls, or severe dry rot in structural joists will halt the appraisal process until certified by a structural engineer.
Heating, cooling, and mechanical systems
Under HUD Handbook 4000.1, the home's heating system must be capable of maintaining a minimum interior temperature of 50 degrees Fahrenheit in all living areas. Appraisers verify that the furnace or heat pump turns on and operates normally. In warmer climates like Florida, central air conditioning is not strictly required by HUD unless it is needed to control moisture or is standard for the local market, but if an A/C system is present, it must function as intended.
Electrical and plumbing systems
The electrical panel must have sufficient capacity to serve the property, and frayed wiring, exposed junction boxes, or open splices must be repaired. For plumbing, the appraiser turns on faucets, flushes toilets, and verifies adequate water pressure and hot water generation. Homes with private wells or septic tanks must show functional operation and satisfy minimum separation distances specified in HUD guidelines.
Safety, security, and egress
Every bedroom must feature an adequate emergency exit, typically a window or exterior door leading directly outside. Missing handrails on interior or exterior stairs with three or more risers are a frequent failure item. Appraisers also ensure that crawlspaces and attics have adequate ventilation to prevent excess moisture accumulation and wood decay.
For a broader look at baseline criteria, explore our breakdown of essential FHA property requirements.
Common issues that cause an FHA appraisal to fail
Most appraisal issues fall under minor health and safety violations rather than catastrophic structural defects. When an appraiser spots a deficiency, they issue the appraisal "subject to repairs," which means the loan cannot fund until the repair is finished and re-inspected.
Common issues that trigger repair requirements include:
- Peeling or chipping paint on homes constructed before 1978.
- Missing handrails on interior or exterior stairs with three or more risers.
- Inoperable windows or sticking doors that prevent safe emergency egress from bedrooms.
- Active plumbing leaks, dripping faucets, or standing water under sinks.
- Water heater deficiencies, such as a missing temperature and pressure-relief (TPR) discharge pipe.
- Damaged or missing flooring that leaves subflooring exposed.
- Roof leaks or missing shingles indicating substantial wear.
- Empty or green swimming pools that present health or fall hazards, which require proper fencing and operational filtration equipment.
How to handle FHA appraisal repairs
When an appraisal comes back marked "subject to repairs," you have several practical paths forward to keep your purchase contract on track:
1. Seller completes the repairs
The most common approach is asking the seller to complete the specified repairs using a licensed contractor or competent handyman before closing. Once the work is done, the appraiser returns to the property to complete a final inspection—recorded on Fannie Mae Form 1004D / Freddie Mac Form 442—to verify that all defects meet HUD standards.
2. Buyer completes the repairs with seller permission
If the seller is unwilling to pay for or complete minor fixes, the buyer may sometimes negotiate permission to complete low-cost items (such as installing handrails or scraping and painting window sills) prior to the re-inspection. However, doing work on a home you do not yet own carries legal and financial risks if the transaction ultimately cancels.
3. Transition to an FHA 203(k) renovation loan
If the appraisal uncovers major defects—such as an entirely failed roof, broken central HVAC, or foundation movement—that the seller refuses to fix, you can explore switching from a standard 203(b) purchase loan to an FHA 203(k) renovation loan. A 203(k) mortgage allows you to bundle both the purchase price and necessary rehabilitation costs into a single loan, eliminating the requirement that repairs be completed before closing.
FHA financing rules and borrowing limits
An FHA-insured loan requires a minimum down payment of 3.5% for borrowers with a credit score of 580 or higher, according to HUD Handbook 4000.1. Borrowers with scores between 500 and 579 must provide a 10% down payment under HUD guidelines. To learn more about debt thresholds for qualification, see our guide on FHA loan income requirements and DTI ratios.
FHA loans carry both an Upfront Mortgage Insurance Premium (UFMIP) and an annual Mortgage Insurance Premium (MIP). Under HUD Handbook 4000.1, the UFMIP is 1.75% of the base loan amount, which is typically financed into the mortgage.
For loan terms greater than 15 years with a base loan amount at or below $726,200, the annual MIP under HUD Mortgagee Letter 2023-05 is 0.50% if your loan-to-value (LTV) ratio is 95% or less, and 0.55% if your LTV exceeds 95%. For base loan amounts exceeding $726,200, the annual MIP is 0.70% for LTVs of 95% or lower, and 0.75% for LTVs above 95%. This annual charge is broken into monthly payments added to your regular mortgage payment.
FHA loan limits restrict the maximum base loan amount you can finance, not the property purchase price. HUD sets these limits each year by county and by the number of units (1 to 4). In Florida, base loan limits range from lower-cost rural counties up to high-cost ceilings in areas like Monroe County. You can review county-by-county thresholds in our Florida FHA loan limits guide. If a home's purchase price exceeds the county loan limit, you do not need to switch loan products; you simply pay the remaining balance in cash as a larger down payment under HUD rules.
All loans through Simply Approved Mortgages require formal underwriting and approval. We help home buyers in Florida and Colorado compare options across FHA purchase loans and conventional financing to find the right loan structure for their budget.
Sources
This government publication is cited for FHA program background and general consumer education. FHA program rules described here are published by HUD and are not underwriting decisions; all loans remain subject to lender underwriting and approval. Simply Approved Mortgages LLC (NMLS #2620881) is a mortgage broker and is not HUD, FHA, or the CFPB, and is not affiliated with or endorsed by any government agency.
