When an Inspection Finding Becomes a Mortgage Problem
You found the perfect home, your offer was accepted, and you're moving through the process. Then the home inspection report comes back with issues. Some are minor. Others can actually prevent your mortgage from being approved.
Understanding which inspection findings affect your mortgage — and which don't — can save you time, money, and stress. Here's what The Taberne Group wants every buyer to know.
How Inspections and Mortgages Are Connected
Your lender doesn't just care about you as a borrower — they care about the property as collateral. If the home has significant problems, it may not meet the lender's minimum property standards, and the loan can't be approved until those issues are resolved.
This is especially true for FHA and VA loans, which have stricter property requirements than conventional loans.
Red Flags by Loan Type
FHA Loan Requirements
FHA has specific Minimum Property Requirements (MPRs) that must be met. Common red flags include:
If any of these are found, the seller must repair them before the loan can close — or the deal may fall through.
VA Loan Requirements
VA has similar requirements called Minimum Property Requirements (MPRs), including everything above plus:
Conventional Loan Requirements
Conventional loans have the most flexibility. The appraiser notes condition issues, but fewer items are mandatory fixes. However, serious structural, safety, or health hazards can still affect approval.
The Top 5 Deal-Killing Inspection Issues
1. Foundation Problems
Major cracks, bowing walls, or signs of settling can indicate structural failure. Lenders may require a structural engineer's report. Repair costs can range from $5,000 to $50,000+, and some buyers walk away.
What to do: Get a structural engineer's assessment. If the repair is manageable and the seller agrees to fix it, the deal can proceed.
2. Roof Damage
A roof that's leaking, missing shingles, or near end-of-life is a major red flag. FHA and VA loans typically require at least 2-3 years of remaining roof life.
What to do: Get a roofer's estimate. Negotiate seller repairs or a price reduction to cover replacement.
3. Water and Mold Issues
Active water intrusion and mold are health hazards that lenders take seriously. Signs include musty smells, staining, warped wood, and visible mold growth.
What to do: Identify the water source, get remediation estimates, and require repairs before closing.
4. Electrical Problems
Knob-and-tube wiring, aluminum wiring, exposed connections, or an undersized electrical panel can be safety hazards and insurability issues.
What to do: Get an electrician's assessment. Some insurers won't cover homes with knob-and-tube wiring, which creates a separate problem.
5. Plumbing Issues
Polybutylene pipes (common in 1978-1995 homes), galvanized steel pipes, sewer line problems, or failing septic systems can cost thousands to repair.
What to do: A sewer scope inspection ($150-$300) is worth every penny. Negotiate repairs or replacements.
What's NOT Usually a Deal Killer
How to Handle Inspection Issues
Step 1: Prioritize
Separate safety/structural issues (which affect your mortgage) from maintenance items (which don't). Focus negotiations on the items that actually matter.
Step 2: Get Specialist Estimates
General inspectors identify problems. Specialists (roofers, electricians, structural engineers) provide solutions and costs. These estimates strengthen your negotiation position.
Step 3: Negotiate
Common approaches:
Step 4: Re-Inspect
If the seller makes repairs, get the work re-inspected before closing to ensure it was done properly.
Protecting Yourself
Always get a home inspection — even if it's not required by your lender. The $400-$600 cost is the best insurance policy you'll ever buy. Consider additional specialized inspections for:
We're With You Every Step
The Taberne Group guides our clients through inspection findings and helps negotiate solutions that keep deals on track. If issues arise, we work with the appraiser, the real estate agents, and our underwriting team to find a path forward. Call us at (215) 266-0663 or start your application at movement.com. We serve homebuyers across Pennsylvania and New Jersey.