FHA appraisal: peeling paint rules

The appraiser's job on paint

Under the FHA rules the appraiser acts as the lender's eyes on the property. Defective paint is one of the conditions the appraiser must report because it bears on the minimum property requirements: the idea that an insured home be safe, sound and secure. The Handbook splits the rule by building date at 1978. Everything turns on the year built, and on whether the paint is defective in the sense the text defines.

Homes built before 1978

For improvements built before 1978 the appraiser must observe all interior and exterior surfaces, including common areas, stairs, decks, porches, railings, windows and doors, for defective paint, listed as cracking, scaling, chipping, peeling or loose. Exterior surfaces include fences, detached garages, storage sheds and other outbuildings. The appraiser must note the condition and location of all defective paint and require repair in compliance with 24 CFR 200.810(c) and any applicable EPA requirements. For a condominium unit built before 1978 the appraiser looks at the interior of the unit, the common and exterior surfaces of the specific unit and appurtenant structures, and the overall condition of the project. The lender, for its part, must confirm the property is free of lead paint hazards.

Homes built in 1978 or later

When the dwelling and related improvements were built in or after 1978, the appraiser must report all defective paint surfaces on the exterior, but repair is required only for defective paint that exposes the subsurface to the elements. Unpainted surfaces intended to withstand the elements, such as stained or pressure-treated wood, do not require repair. So a faded but intact finish is a note, while bare, weathered siding is a repair item. The test is about protecting the structure: the Handbook ties repair to paint that leaves the subsurface exposed.

What counts as a proper repair

The Handbook text on paint repair that is most specific appears in the 203(k) work write-up rules, and it shows how seriously the lead concern is taken. There, all defective paint and paint that will be disturbed must be scraped, primed and double coated; for homes built before 1978 a lead-safe renovation contractor certified by the EPA or state must do exterior painting, machine sanding and open flame methods are not permitted, and washing and repainting without thorough removal or covering with siding is not adequate. That is the standard for a rehabilitation loan, and it is useful context for what a sensible fix looks like, but it is not an automatic requirement for every FHA purchase.

Lead disclosure on the sale

Separately from the appraisal, for homes built before 1978 the Handbook requires the lender to check that the seller disclosed what is known about lead-based paint under the HUD-EPA Lead Disclosure Rule. The borrower must have received the EPA-approved pamphlet, had a 10-day period before becoming obligated to conduct a lead inspection or risk assessment (or waived it), and the sales contract must carry a signed lead warning statement and the seller's disclosure. If an agent is involved, the contract must record that the agent informed the seller of the seller's obligations. These steps are about information; the appraisal rule above is about condition.

A quick example

A 1962 ranch with chipped paint on a porch rail: the appraiser must note it and require repair, regardless of how much of the surface shows bare wood. A 2004 house with peeling paint on the south fascia that exposes bare wood: repair required. The same house with a sun-faded finish that is still intact: reported, not necessarily a repair item. A 2010 cedar deck left unpainted by design: no repair. The checker above runs these same four cases.

Limits

The appraiser reports and the lender decides; local rules and EPA requirements can add duties. This page is not a lead inspection and does not assess health risk. For the wider list of conditions see the minimum property requirements page, and for financing repairs see the 203(k) page.

Sources

• HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook, Update 18 PDF: Appraiser and Property Requirements: Defective Paint (04/10/2025), Environmental and Safety Hazards (01/24/2022), Handbook pp. 826-828; Lead-Based Paint disclosure, p. 139; 203(k) work write-up, pp. 535-536. Read November 2, 2026.
• HUD, Single Family Housing Policy Handbook 4000.1 information page. Read November 2, 2026.

Text read: HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook, the clean Update 18 PDF that HUD links from its Handbook 4000.1 information page (HUD lists it as the August 12, 2026 update). Section headings carry their own effective dates, given above for this page. A heading with two dates, such as (11/10/2026)(06/27/2025), shows a revised date written over the prior one. Confirm current dollar limits and premium rates with an FHA-approved lender. This page paraphrases the Handbook and does not replace it. Page numbers cited are the Handbook's own and may be approximate; use the section headings to locate the text.