When a buyer makes an offer on your home, their lender will almost always require an inspection or appraisal to ensure the property meets certain safety and livability standards. The type of financing a buyer uses determines what inspectors look for—and what might need attention before closing.
Knowing these differences can help you prepare your home, avoid delays, and make smarter decisions when comparing offers.
What They Look For:
Conventional loans are the most flexible when it comes to property condition. Inspectors and appraisers focus mainly on overall market value and major safety issues rather than cosmetic flaws.
What Gets Flagged:
Roof leaks or signs of water intrusion
Foundation cracks or movement
Inoperable heating, cooling, or electrical systems
Significant safety hazards (exposed wiring, missing handrails, etc.)
Common Findings:
Minor wear and tear—like chipped paint or outdated finishes—usually isn’t an issue. As long as the home is sound and systems function properly, it should pass without concern.
What They Look For:
FHA loans require homes to meet HUD’s Minimum Property Standards. The focus is on safety, security, and soundness. FHA appraisers act as both valuators and inspectors, noting anything that could make the property unsafe or unlivable.
What Gets Flagged:
Peeling or flaking paint (especially if built before 1978)
Missing handrails or unsafe stairways
Leaky roof or standing water around foundation
Broken windows, doors, or locks
Non-functioning mechanicals (furnace, water heater, etc.)
Common Findings:
Common FHA issues include chipped paint, missing smoke detectors, or missing GFCI outlets near sinks. These are often simple fixes but must be resolved before closing.
What They Look For:
VA loans include both a VA appraisal and review of Minimum Property Requirements (MPRs). The goal is to ensure the home is safe, sanitary, and structurally sound for veterans and service members.
What Gets Flagged:
Roof or structural damage
Unsafe electrical wiring
Standing water near the foundation
Non-working heating systems
Evidence of termites or moisture damage
Common Findings:
Loose handrails, missing smoke or CO detectors, and minor roof issues are typical. A pest inspection is often required, and any termite activity must be corrected before closing.
What They Look For:
USDA loans apply to homes in eligible rural areas and have inspection standards similar to FHA. The property must be “modest, safe, and sanitary.”
What Gets Flagged:
Inadequate well or septic system
Roof leaks or structural issues
Exposed wiring or missing handrails
Non-functional mechanical systems
Common Findings:
Outdated or failing septic systems, uneven foundations, or missing carbon monoxide detectors. Additional verification of well and septic systems is often required before approval.
What They Look For:
Cash buyers don’t have lender requirements, so inspections are optional. Some buyers skip them altogether, while others still hire an inspector for peace of mind.
What Gets Flagged:
Anything the buyer chooses to address—there are no formal standards.
Common Findings:
Cash buyers might still negotiate price adjustments if major issues like foundation damage, mold, or roof leaks are discovered, but the process is typically faster and less restrictive.
No matter the financing type, a few proactive steps can help you avoid surprises:
Ensure your roof, furnace, and water heater are in working order.
Install smoke and carbon monoxide detectors where required.
Secure handrails, windows, and doors.
Address moisture or peeling paint issues before listing.
Different loan types come with different inspection standards. Conventional loans are typically the most forgiving, while FHA, VA, and USDA loans have stricter requirements focused on safety and habitability.
At Bay Realty Michigan, we walk our sellers through every step—from pre-listing evaluations to inspection repairs—so you can move forward with confidence and fewer surprises.
Thinking about selling or wondering what might come up in an inspection?
Contact Bay Realty Michigan today—we’ll help you prepare your home to shine under any loan type.