If you are buying or selling a home, its condition impacts more than just curb appeal and price. It may impact mandatory repairs that must be made prior to closing based on the buyer’s loan type.

So, it’s important for both buyers and sellers to understand the property condition requirements of the loan type early on in the process, in order to avoid any deal-killing repair conditions revealed by the appraisal.

For buyers using a conventional loan, the appraiser is mainly concerned with determining the current value of the home based in its current condition. If the home has a broken appliance, the appraiser will take that into consideration when calculating the value of the home, but there is no requirement by the lender for the appliance to be repaired or replaced.

For buyers using an FHA or VA loan, the appraiser is concerned with determining the current value of the home and making sure the home meets minimum health and safety standards. 

These health and safety standards include items such as:

• All appliances must be working
• The roof must have at least 2 years of remaining life
• No missing handrails
• No chipping, peeling, or cracked paint on homes built prior to 1978

All health and safety items noted in the appraisal must be addressed and remediated in order for the property to proceed with FHA or VA financing.

As a seller, being aware of property condition requirements can assist when evaluating offers on your home to determine which is most beneficial to you. It can also aid you in preparing your home in advance of the appraisal.

As a buyer, it’s important to communicate your loan type to your real estate professional. This way they can help match you to the property that will meet both your needs and property condition requirements of your financing choice.

For more on the home buying process, visit the Mortgage Loans page on our website.

Published February 2023

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All loans subject to credit approval