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Home Appraisals Explained: Common Issues, Required Repairs, Re-Inspections, and What Borrowers Need to Know

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When buying or refinancing a home, one of the most important parts of the mortgage process is the appraisal. Many buyers believe the appraisal is simply about determining the property’s value, but in reality, the appraiser is also looking at the property’s condition, safety, habitability, and marketability depending on the loan type.

If issues are found during the appraisal, the lender may require repairs before the loan can close. In many cases, the appraiser must return to the property for a re-inspection to confirm the repairs were completed. This can result in delays, additional costs, and sometimes even loan denials if the issues are severe enough.

Understanding what causes appraisal problems — and how to fix them — can save buyers, sellers, and real estate agents a great deal of stress during the transaction.

What Is a Home Appraisal?

A home appraisal is an independent professional opinion of a property’s market value and condition. The lender orders the appraisal to make sure the home is worth the amount being financed and that it meets the lending guidelines for the specific mortgage program.

The appraiser evaluates:

The stricter the loan program, the stricter the property condition requirements usually are.

Why Appraisals Sometimes Fail

A property may fail an appraisal or receive “subject to repairs” conditions for several reasons:

Health and Safety Concerns

Lenders want to ensure the home is safe to live in. Issues that create health or safety hazards often trigger mandatory repairs.

Examples include:

Structural Problems

Structural concerns can raise major red flags because they may affect the stability and long-term value of the property.

Examples include:

These issues often require evaluations by licensed contractors or engineers before the lender will approve the loan.

Roof and Insurance Problems

Roof issues are one of the most common appraisal conditions today, especially in states like Florida where insurance companies have tightened requirements.

Common roof-related concerns:

Even if the lender accepts the property, the insurance company may refuse coverage until repairs or replacement are completed.

Since lenders require homeowners insurance before closing, insurance-related property issues can indirectly kill the loan.

Deferred Maintenance

Appraisers look for signs that the property has not been properly maintained.

Examples include:

While some cosmetic issues may be acceptable, excessive neglect can create concerns about the overall condition of the property.

FHA Appraisals: The Strictest Property Standards

loans are well known for stricter appraisal and property condition requirements because the property must meet minimum property standards (MPS).

FHA appraisers focus heavily on:

The property must be move-in ready and safe for occupancy.

Common FHA Appraisal Repair Requirements

Peeling Paint

This is extremely common in homes built before 1978 due to lead-based paint concerns.

Required remedy:

A re-inspection is usually required.

Missing Handrails

If there are three or more steps, FHA commonly requires handrails.

Required remedy:

Roof Issues

FHA generally requires:

Required remedy:

Electrical Problems

Examples:

Required remedy:

Water Heater Issues

FHA commonly flags:

Required remedy:

Broken Windows and Doors

FHA requires homes to be secure and weatherproof.

Required remedy:

FHA Re-Inspection Process

After repairs are completed, the appraiser usually returns to verify the work.

This is called a re-inspection or final inspection.

Typical FHA re-inspection fees:

The appraiser then submits an updated report confirming whether the repairs were completed satisfactorily.

Until this happens, the lender usually cannot clear the loan for closing.

Conventional Loan Appraisals

and conventional loans are generally more flexible than FHA loans regarding property condition.

Conventional appraisals focus more heavily on:

Minor cosmetic issues are often overlooked.

Common Conventional Appraisal Conditions

Although conventional loans are more flexible, certain issues still create problems.

Major Roof Problems

Lenders may still require repairs if:

Structural Damage

Conventional lenders still take structural issues seriously.

Examples:

Often the lender requests:

Health and Safety Hazards

Examples:

These can still trigger repair conditions.

Cosmetic Issues Usually Allowed on Conventional Loans

Unlike FHA, conventional loans may allow:

As long as the home is safe and marketable.

Non-QM Appraisals

loans vary significantly because guidelines depend on the lender and program.

Non-QM lenders may finance:

Property condition flexibility often depends on the lender’s risk tolerance.

Common Non-QM Appraisal Issues

Investor Property Concerns

For DSCR and investor loans, lenders heavily focus on:

Examples:

Incomplete Construction

Many Non-QM lenders will not finance homes with:

Unless using a renovation-specific loan product.

Insurance Restrictions

Even Non-QM lenders usually require acceptable insurance coverage.

Properties with:

May still require repairs before closing.

What Happens If Repairs Are Needed?

When appraisal repairs are required, several things usually happen:

1. Repairs Are Negotiated

The buyer and seller negotiate:

2. Repairs Are Completed

Licensed contractors may be required depending on the severity of the issue.

3. Re-Inspection Ordered

The appraiser returns to confirm repairs.

4. Loan Moves Forward

If repairs pass inspection, underwriting can continue toward closing.

Common Repairs That Trigger Re-Inspections

Some of the most common repair conditions include:

Who Pays the Re-Inspection Fee?

In many transactions:

Typical re-inspection costs:

Some lenders require payment upfront before ordering the re-inspection.

How to Avoid Appraisal Problems

For Sellers

Before listing:

For Buyers

Before making offers:

For Realtors

Understanding loan guidelines helps prevent surprises.

For example:

Final Thoughts

Appraisals are about much more than just value. The condition of the property can significantly impact whether a loan gets approved, delayed, or denied.

FHA loans tend to have the strictest repair requirements due to safety and habitability standards. Conventional loans are more flexible but still care about structural and major condition issues. Non-QM loans can vary widely depending on the lender and program.

The good news is that many appraisal issues are repairable. Understanding common appraisal problems ahead of time can help buyers, sellers, and agents avoid delays, reduce stress, and close transactions more smoothly.

If you are buying, selling, refinancing, or investing in real estate and have questions about appraisal requirements for FHA, Conventional, DSCR, or Non-QM financing, speaking with an experienced mortgage professional early in the process can help you avoid costly surprises.

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