What Are FHA Minimum Property Standards?
FHA property standards focus on three things: safety, security, and structural integrity — ensuring homes are in livable condition before loan approval. These are often called the “Three S’s.”
When you use an FHA loan to buy a house, it first has to pass an FHA appraisalAn appraisal is an independent, professional opinion of a property's value. It is completed by a licensed appraiser who examines the home, studies recent sales in the area, and applies established valuation methods to determine what the property is worth in the... More. This evaluation determines two things: its estimated market value and its overall condition. The condition piece verifies that the property meets HUD’s Minimum Property Requirements (MPR). If the home fails to meet these standards, you cannot use an FHA loan to buy it.
The Three S’s Explained
Safe
The home must provide a safe and healthy living environment, free of health hazards like pest infestations, toxic materials such as friable asbestos, or exposed lead-based paint. Plumbing, heating, and electrical systems must be in good working order, and the property needs features like sturdy stair rails and proper ventilation.
Sound
The home’s foundation, walls, and roof should be solid and not in danger of collapse or failure. There should be no ongoing structural issues such as major foundation cracks, visibly sagging beams, or a failing roof.
Secure
Windows and exterior doors must be intact and lockable, and any other openings should be covered appropriately. A broken exterior door or missing window not only diminishes security but could also let in weather or pests.
The FHA Appraisal
The standards are enforced by an FHA-approved appraiser, who performs a dual role: determining the home’s current market value and conducting a visual assessment to ensure the property complies with minimum property requirements.
Only a specially trained FHA-approved appraiser can conduct this appraisalAn appraisal is an independent, professional opinion of a property's value. It is completed by a licensed appraiser who examines the home, studies recent sales in the area, and applies established valuation methods to determine what the property is worth in the... More — and the borrower pays the fee as part of closing costsClosing costs are the fees and charges due at closing beyond the down payment itself — the collection of costs that pay for all the work, insurance, and government processes required to originate a loan and transfer (or refinance) a property. They... More. FHA appraisals are valid for 180 days from the date of issuance.
What the Appraiser Checks
Key areas the appraiser will evaluate include:
Appliances & Systems
- Air conditioning, heating, and water heater
- Electrical systems
- Major appliances included in the sale
Basement
- Functional ventilation
- No dampness or signs of foundation settling
- No evidence of termites
Bedrooms & Bathrooms
- A heating source in each bedroom
- Working toilets, sinks, shower and bath fixtures, and hot water
General
- Handrails on stairs
- No lead-based paint hazards
- Smoke detectors
- Sound walls and windows
- No excessive external noise
Exterior
- All-weather access to the home
- Roof in good condition — no holes or loose shingles, proper drainage, minimum 2 years of life remaining
- Properly graded foundation with good drainage and no major cracks
What Doesn’t Fail an FHA Appraisal
The FHA does not require fixes for cosmetic or minor defects that don’t affect safety, security, or soundness. Normal wear and tear is generally not grounds for a failed appraisalAn appraisal is an independent, professional opinion of a property's value. It is completed by a licensed appraiser who examines the home, studies recent sales in the area, and applies established valuation methods to determine what the property is worth in the... More. Generally acceptable issues include:
- Worn carpets, outdated finishes, or cosmetic blemishes
- Peeling paint on homes built after 1978 (where lead-based paint is not a concern)
- Minor plumbing drips causing no damage
- Small cracked window glass, if still operable and not a cut hazard
- Missing handrails in low-risk areas
What If the Home Doesn’t Pass?
There are a few paths forward if the appraiser identifies issues:
- Ask the seller to make repairs before closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More — the most common solution.
- Repair escrow — for repairs under $5,000, the lender holds 1.5 times the contractor’s bid in escrow and the work is completed after closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More.
- FHA 203(k) renovation loan — allows you to finance both the home purchase and the cost of repairs in a single loan, useful when repairs exceed the escrow threshold. Learn more about the FHA 203(k) loan →
2025 Update: Starting January 2025, new construction in Special Flood Hazard Areas must have the lowest floor at least two feet above the base flood elevation — particularly relevant in NH given our many lake- and river-adjacent properties.
Common FHA Property Issues in New Hampshire
Beyond the general checklist, certain property conditions come up frequently in NH transactions. Here’s what buyers and sellers should be aware of:
1. Peeling or Chipping Paint
If the appraiser spots chipping or peeling paint anywhere on the home — interior or exterior — they will call for it to be corrected before closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More. The concern is lead-based paint, which was common in homes built before 1978.
Options if paint is an issue:
- The seller makes the repairs prior to closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More (most common).
- A repair escrow is set up for repairs under $5,000, completed after closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More with 1.5x the contractor’s bid held in escrow.
- An FHA 203(k) renovation loan covers more extensive repairs, rolled into the mortgage.
2. Wells and Septic Systems
FHA has specific distance requirements between private wells and septic systems. In New Hampshire, FHA follows state standards:
- Well and septic system: at least 75 feet apart (NH state standard — FHA normally requires 100 feet but defers to NH)
- Well to property line: at least 10 feet
- Well to septic tank: at least 50 feet
- Well to drain field: at least 75 feet
Important for NH buyers: Sand-point wells and artesian wells are not eligible for FHA financing.
Note on water quality: FHA does not require a water quality test unless the appraiser observes a specific problem — such as no water pressure, discolored water, or an unusual odor. If noted, a test will be required before closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More.
3. Roof Condition
The roof must have at least two years of useful life remaining and must not be actively leaking. If the appraiser has any concern about the roof’s condition, they can require a licensed roofer or home inspector to evaluate it and certify its remaining life before the loan can close.
4. Attic Mold
If there is any accessible opening to the attic, the appraiser is required to visually inspect it — at minimum, putting their head inside to look around. If mold is visible, it will need to be remediated before closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More.
Attic mold is a common issue in New Hampshire, often caused by insufficient ventilation. Occasionally, discoloration looks like it could be mold — if the appraiser calls it out and a mold specialist confirms it is not actually mold, no remediation is required. If mold is confirmed, the FHA 203(k) loan can be used to treat it after closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More.
5. Other Defects — When the Appraiser Calls for an Inspection
FHA appraisers are not home inspectors, but if they observe something that raises concern, they can require a professional inspection of that specific system before the loan proceeds. Common examples in NH include:
- Chimney condition (crumbling mortar, missing cap, damaged flashing)
- Foundation cracks or signs of settlement
- Signs of water intrusion or drainage problems
If an inspection reveals problems, repairs must be completed — or the loan cannot move forward.
6. Crawl Spaces
The appraiser must inspect the crawl space and verify it meets HUD standards. Specifically:
- Posts and piers must be structurally sound and set below the frost line (critical in NH given our winters)
- The crawl space must be free of trash and debris
- A vapor barrier (typically plastic sheeting) must be present to prevent ground moisture from reaching the floor joists
- Proper ventilation must be present
- Clearance from the floor joists to the ground must be at least 18 inches
Dampness or standing water in a crawl space will typically trigger a required repair before closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More.
Have questions about whether a property will qualify for FHA financing? As an independent mortgage broker licensed in New Hampshire, I can walk you through what to expect before you make an offer. Learn more about FHA loans in NH →