When you’re buying a home, one of the most important parts of the process is the inspection and appraisal. These steps protect both you and your lender by making sure the home is safe, structurally sound, and worth the amount being financed.
Each type of loan—conventional, FHA, VA, or USDA—has its own inspection standards and requirements. Understanding these differences can help you prepare, avoid surprises, and move smoothly toward closing.
What Inspectors Look For:
Conventional loans are generally the most flexible when it comes to property condition. The appraiser is mainly concerned with the home’s market value and major safety or structural issues, not minor cosmetic items.
What Might Be Flagged:
Roof leaks or water damage
Foundation cracks or structural movement
Non-functioning HVAC, electrical, or plumbing systems
Major safety concerns (exposed wiring, missing handrails, etc.)
What Buyers Should Expect:
Minor issues—like chipped paint or outdated flooring—won’t typically impact your loan. You can often negotiate repairs or credits for larger items, but conventional financing gives you more room to buy a home that needs light updates.
What Inspectors Look For:
FHA loans follow HUD’s Minimum Property Standards, focusing on safety, security, and soundness. The appraiser evaluates both value and condition to ensure the property is livable and free from hazards.
What Might Be Flagged:
Peeling paint (especially on homes built before 1978)
Missing handrails or unsafe steps
Roof leaks or standing water near the foundation
Broken windows, doors, or locks
Non-working furnace, water heater, or other essential systems
What Buyers Should Expect:
If issues are found, the seller typically must make repairs before the loan can close. Common FHA fixes include adding smoke detectors, replacing missing GFCI outlets, or repairing peeling paint.
What Inspectors Look For:
VA loans include both a VA appraisal and a review of Minimum Property Requirements (MPRs) to protect veterans from purchasing unsafe or unsanitary homes.
What Might Be Flagged:
Roof or structural damage
Electrical hazards
Standing water or poor drainage
Non-working heating system
Termite or moisture damage
What Buyers Should Expect:
A pest inspection is often required, and any termite issues must be corrected before closing. VA buyers should be prepared for possible repair requests, but these standards ensure you’re getting a solid, healthy home.
What Inspectors Look For:
USDA loans apply to homes in eligible rural areas and carry inspection standards similar to FHA. The property must be “modest, safe, and sanitary.”
What Might Be Flagged:
Failing well or septic systems
Roof leaks or foundation issues
Missing railings or exposed wiring
Malfunctioning mechanical systems
What Buyers Should Expect:
USDA loans often require additional verification for water and septic systems, and some repairs may need to be completed before closing. While the process can take a little longer, it helps ensure your new home is in solid shape.
What Inspectors Look For:
If you’re paying cash, inspections are optional—but highly recommended. Without lender requirements, you have the flexibility to decide what’s important to you.
What Might Be Flagged:
Anything that concerns you personally—there are no formal standards.
What Buyers Should Expect:
Even in cash deals, inspections help uncover hidden issues like foundation cracks, roof leaks, or plumbing problems. You can still negotiate with the seller for repairs or price adjustments, but you control the process.
No matter your loan type, you can make the inspection process easier by:
Hiring a qualified local home inspector familiar with your loan type.
Being present during the inspection to ask questions and learn about the home.
Discussing potential repairs or credits with your agent early in the process.
Remembering that no home is perfect—the goal is to understand what you’re buying.
Different loans come with different inspection standards—but they all serve the same purpose: protecting you and your investment.
At Bay Realty Michigan, we help our buyers understand what to expect from each financing type, guide you through the inspection and appraisal process, and negotiate repairs when needed—so you can move forward with confidence.
Ready to start your home search or have questions about inspection requirements?
Contact Bay Realty Michigan today—we’re here to help you every step of the way.