FHA appraisal called for repairs. Who pays and what happens next?

The lender decides what must be fixed, not the appraiser

When an FHA appraisal comes back with a list of repairs, the first question is not who pays. It is which items are actually required.

The appraiser's job is to note the repairs needed to make the house meet HUD's property standards, along with an estimated cost to cure. HUD then puts the decision with the lender. In HUD's words, "The Mortgagee must determine which repairs must be made for a Property to be eligible for FHA-insured financing."

So read the appraisal, then ask the loan officer which items the underwriter is requiring as a condition of the loan. Sometimes the list shrinks. Sometimes it does not. Either way, you want the final list before anybody calls a contractor.

A quick word on what these repairs are about. FHA's standards are about a house being safe, sound and secure. The appraiser is not flagging your avocado bathroom tile. The appraiser is flagging things like a leaking roof or exposed wiring.

Who pays is a negotiation, not an FHA rule

Nothing in the FHA rules forces the seller to pay for repairs. That surprises a lot of buyers. The seller can say no.

Here are the realistic options:

• The seller makes the repairs before closing. This is common when the items are small or the seller wants the deal done.
• The buyer pays for the repairs. Possible, but you are paying to fix a house you do not own yet, so get it in writing and coordinate with the seller.
• Split the cost or trade a price reduction for the work.
• Renegotiate the price or terms around the repair cost.
• Change loan types. A conventional loan may not require the same repairs, though it means a new loan process and new qualifying.
• Walk away, if your contract gives you a way out.

Your purchase contract and your contingencies decide which of these are on the table. If the contract is unclear, that is a question for your agent, and for a real estate attorney if the stakes are high.

What happens after the repairs are done

Required repairs are normally finished before closing. Then the appraiser comes back for a reinspection, checks the items and clears the conditions if the work is adequate.

A few things trip people up at this stage:

• Partial work. If the report listed three items and two got done, the condition is not cleared. Close does not count.
• No access. The appraiser needs to get in and see each item. A locked crawl space means a second trip.
• Timing. The reinspection has to be scheduled, completed and reviewed before closing. Book it early.
• Weather and backorders. Exterior paint does not dry in a rainstorm, and a water heater on backorder does not care about your closing date.

If repairs truly cannot be done before closing, HUD's handbook lets the lender set up a repair escrow under its repair completion requirements. That is the lender's call, not a right you can demand.

When the repair list is too big

Some houses need more than a weekend of fixes. If the repairs are major, a standard FHA purchase may not be the right tool.

That is where the FHA 203(k) program comes in. It is FHA's rehabilitation loan, built for buying a home that needs work and financing the improvements as part of the deal. It comes with its own appraisal and process, so talk with a loan officer who has closed them before.

And some problems cannot be fixed at all. A house sitting under high-tension power lines is not something a contractor can repair. In those cases the question becomes whether the property is eligible for FHA at all.

The honest move is to find this out early. If the seller already knows the furnace is from the Carter administration, put it in the conversation before the appraiser finds it.

One more thing I tell sellers. A repair list is not an insult, it is information. Every future buyer, FHA or not, will notice the same leaking roof. Pricing the house as if the problem is not there only works until the first person with a flashlight walks in.

What to do when the repair list lands

1. Get the report and read the repair list. Note each item and the appraiser's cost estimate.
2. Ask the lender which items are required. Get the final condition list in writing.
3. Get real bids from licensed contractors. The appraiser's estimate is a guide, not a quote.
4. Negotiate in writing through your agents: who does the work, who pays and by what date.
5. Schedule the work and the reinspection together so they fit before your closing date.
6. Keep receipts, permits and photos. They help the reinspection go fast.
7. Watch the appraisal's age. An FHA appraisal is generally good for 180 days from its effective date, and slow repairs can run that clock down.

HUD has proposed narrowing what counts as a required repair

On September 22, 2026, HUD posted a draft rewrite of its appraisal and property rules to its FHA Single Family Drafting Table, with feedback due November 6, 2026. It is not in effect, and there is no guarantee it will be adopted as written.

Under the draft, repair conditions would apply only to issues affecting safety, security, soundness, marketability or the health of the people living there. Cosmetic items and minor deferred maintenance would be noted but would not require a repair condition. The draft would also make homes rated C5, C6 or Q6 ineligible as collateral unless every deficiency is cured before closing.

If that version is finalized, expect fewer small repair conditions and more weight on the overall condition rating. Until a final version is published, the current Handbook 4000.1 rules apply.