FHA and VA Loan Mold Requirements

Why These Loans Are Different

FHA and VA appraisals are not just valuations. The appraiser also evaluates whether the property meets minimum property standards covering safety, soundness, and habitability. Conditions that threaten the health of occupants fall squarely inside that review.

A conventional appraisal is primarily about value. An FHA or VA appraisal is about value and condition. That distinction is why mold derails these loans more often.

What Triggers a Flag

Appraisers are not mold inspectors and do not perform testing. They note what is visible: staining, active leaks, standing water, visible growth, damaged materials, and obvious moisture intrusion.

When those appear in the report, the appraisal typically comes back subject to repair. Funding waits until the condition is corrected and, usually, until a re-inspection confirms it.

What This Means for Sellers

If your buyer is using FHA or VA financing — extremely common in the Katy and greater Houston market — visible moisture damage is not something you can paper over with a credit. The lender may simply decline to fund until it is fixed.

That changes the negotiation. A repair credit does not solve a lender condition. The work has to happen, and it usually has to happen before closing.

What This Means for Buyers

A Note on VA Specifically

VA loans are intended to place veterans in safe, sound, sanitary housing, and VA appraisers apply those requirements directly. Sellers marketing to VA buyers should assume condition issues will be caught and should address them in advance.