The standard: Minimum Property Requirements
FHA appraisers judge the house against HUD’s Minimum Property Requirements (MPR) and Minimum Property Standards (MPS), set out in HUD Handbook 4000.1. The handbook says these “form the basis for identifying the deficiencies of the Property that the Appraiser must note within the appraisal report.”
When the house falls short, the appraiser must “report the repairs necessary to make the Property comply, provide an estimated cost to cure, provide descriptive photographs, and condition the appraisal for the required repairs.” The appraisal comes back “subject to” those repairs, and the loan can’t close until they’re handled.
HUD also caps how far this goes. Required repairs are limited to what is needed to “maintain the safety, security and soundness of the Property,” “preserve the continued marketability of the Property,” and “protect the health and safety of the occupants.” And the handbook adds that “the Mortgagee will determine which repairs are required,” so the buyer’s lender has the last word.
Roof, foundation and basement
The structure gets the closest look.
- Roof. It must keep out moisture and have “a remaining physical life of at least two years.” If the appraiser thinks it has less, the appraisal is made subject to inspection by a professional roofer. If the roof can’t be seen, the appraiser checks the attic and ceilings for leaks.
- Foundation. The appraiser looks for readily observable safety or structural problems and reports needed repairs or inspections.
- Basement. It must be “free of dampness, wetness, or obvious structural problems.”
- Sump pump. It must be “properly functioning at the time of appraisal.”
- Crawl space. Vented, free of trash and vermin, no pooled water, and at least 18 inches of clearance where system components run.
- Attic. The appraiser must look inside; a water-stained ceiling or smell of mold makes the appraisal subject to inspection.
Paint and lead: the pre-1978 rule
Paint rules depend on the year the house was built.
Built before 1978. The appraiser must note “the condition and location of all defective paint and require repair,” checking interior and exterior surfaces including stairs, decks, porches, railings, windows, doors, fences, detached garages and sheds. Defective means “cracking, scaling, chipping, peeling, or loose.”
Built in 1978 or later. Only exterior paint that “exposes the subsurface to the elements” must be repaired. Defective interior paint in these homes is listed as cosmetic.
This rule matters in Northeast Ohio. Census estimates for 2020-2024 put the median year built at 1954 in Akron, 1947 in Canton and 1955 in Barberton, so the typical house in all three cities falls under the pre-1978 paint rule. About a third of Akron homes and 41% of Canton homes were built in 1939 or earlier. See the lead paint disclosure guide for the separate federal disclosure rule.
Mechanical systems and utilities
The heating, plumbing and electrical systems must appear to have “reasonable future utility, durability, and economy,” be “safe to operate,” be protected from destructive elements, and have adequate capacity. The appraiser has to operate the systems and watch them work.
Utilities often trip up vacant and estate houses. If the utilities are off, the appraiser asks to have them turned on. If that isn’t possible, the appraisal is made “subject to reobservation” once utilities are restored, which can bring new repair conditions later. If you are selling a vacant house to an FHA buyer, keep water, gas and electric on through the appraisal.
What FHA does not require: cosmetic items
The handbook lets an appraiser complete an as-is appraisal when minor problems from “deferred maintenance and normal wear and tear” don’t affect safety or soundness. It lists examples of cosmetic repairs that are not required:
- missing handrails that do not pose a threat to safety
- holes in window screens
- cracked window glass
- defective interior paint in housing built after 1978
- minor plumbing leaks that do not cause damage, such as a dripping faucet
It also says the appraiser “should not recommend replacement because of age” when a component still works. An old furnace that runs safely is not a required repair just because it is old.
How the repair process works
- The appraisal comes back “subject to.” The lender sends the list to the buyer and the agents.
- You and the buyer negotiate. The contract decides who pays. Options include seller repairs, a price reduction, or the buyer paying.
- The work is done. Use contractors where licensing is needed and keep receipts.
- The lender re-inspects. The appraiser or an inspector confirms completion, often on form HUD-92051, the Compliance Inspection Report.
- If work can’t be finished, the lender may set up a repair escrow, but only if the house is “habitable and safe for occupancy” at closing.
An FHA appraisal is valid for 180 days from its effective date, so conditions can follow the house to the next FHA buyer if the first deal fails.
Should you fix FHA items or sell to another buyer?
If the list is short, such as scraping and painting a porch or replacing a sump pump, making the repairs keeps your FHA buyer and is usually the cheapest path. If the list includes a roof, a wet basement and a failing furnace, a conventional or cash buyer may be the more realistic match. Our guide to what repairs are required to sell a house in Ohio covers the other triggers, and how to sell a house as-is covers buyers who don’t need a lender.
Whatever you do, update your Ohio disclosure form if the appraisal reveals something you didn’t know about. Sellers weighing repairs against a direct sale can request a cash offer to compare.
