Defective paint before & after 1978 for FHA loans

It seems like most of us in the real estate community are on the same page that a property built before 1978 with a defective paint surface will require repairs for an FHA loan. We know lead-base paint was used in the United States before 1978, so there is a health and safety risk present when the paint surface is defective. This makes sense and it’s pretty much common knowledge.

What about after 1978? But what about a property built after 1978 that has a defective paint surface (chipping, peeling or flaking paint)? There is much confusion in the market on this point among lenders, real estate agents, home owners and even appraisers. Does FHA require repairs for a defective paint surface for a house built in 1979, 1993, 2005 or anytime after 1978? The answer is YES, but not because there a “health and safety” issue due to the potential for lead-base paint. The issue here is promoting economic longevity for the property since bare wood can lead to decay, which does not promote the longterm health of the property.

FHA’s latest Valuation FAQ on 2-28-12 (click here for PDF link) (unfortunately FHA removed this link, so I did too. Here is the text though still):

Noted lead based paint still seems to be an issue that is unclear in the minds of some appraisers and lenders. Should the lender automatically call for painting only if the home is pre-1978, or should further measures be taken in all cases?

Page 6 of Appendix D in Handbook 4150.2 states, “For any home built prior to 1978, check for evidence of defective paint surfaces, including: peeling, scaling or chipping paint. For all FHA insured properties, correction is required to all defective paint surfaces in or on structures and/or property improvements built before January 1, 1978 in accordance with 24 CFR Part 35.” The appraiser is further instructed to provide a detailed description and identify the exact location of any deficiency under “physical deficiencies” affecting livability. The appraiser is required to condition the appraisal on the “repair” of any noted lead based paint deficiencies.

As noted in mortgagee letter 2005-48, defective exterior paint surfaces in homes constructed post-1978 where the finish is otherwise unprotected will require automatic repair.

Here is a video I did in 2010 on this very issue of pre-1978 vs post-1978. Watch below or here.

I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written including not leaving paint chips on the ground when curing the defective paint surface and even potential options for handling the cost of the defective paint surface.

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  1. Mike says

    Ryan, what are the FHA guides for a wood deck whose stain is failing, leaving the wood exposed. Would FHA require that the deck be restrained or treated with a wood sealant? Thanks. Mike

    • says

      Hi Mike. That’s a good question. My understanding is that FHA is not okay with bare wood on decks and porches and such, so there shouldn’t be any bare wood. I would personally call for correction if there was bare wood exposed. You can always contact 800-CALL-FHA to talk through your particular situation since you know it best. Good luck.

  2. Rhonda says

    Hello Ryan, thank you so much for all the wonderful information you provide!

    I have a question regarding lead based paint and the FHA appraisal. What if the structure is built pre-1978 with an addition post-1978 and there is chipped & peeling paint observed on the addition portion only. Is the appraisal subject to repair or considered cosmetic and as is?

    Thank you Ryan!

    • says

      Hi Rhonda. Thank you for reaching out. That is a good question. The chipping paint should be cured since it is an issue of economic viability for the property. Some appraisers might not interpret it this way, but this is exactly how FHA has always communicated the issue on the phone to me. In my opinion, it should be called for repair. The issue is cosmetic in nature of course, but it should still be cured. It might be worth doing it before the escrow if possible so a lead-base contractor does not have to be involved. I can imagine a lender calling for one despite the paint being post 1978. Just a heads-up. Also, it’s worth noting that everything within the parcel lines has to meet FHA standards.

  3. Jeff says

    Ryan, I’m about to purchase a Craftsman built in 1928. The upper half story, front dormer and rear 1/2 story is covered with wooden shingles. Someone painted these and the painted surface of some are flaking. The paint was tested and not shown to be lead based.
    As cedar shingles are installed with the quality of performing as the function of man-made shingles, painted wood or vinyl siding without the need to be painted, is this arguably acceptable to the FHA guidelines?
    Also a question about exposed flooring. The previous owner of this home removed the poly from the kitchen’s hardwood floor prior to the home falling into foreclosure. Could this be an issue?
    Thank you for your answered.

    • says

      Hi Jeff. Thanks for reaching out. Congrats on the home purchase too. I’m glad to hear the paint does not have any lead. Despite that fact though, FHA is very strict about chipping paint, so I’d say it still needs to be cured. I get where you are coming from and the logic too why it would not need to be scraped and/or re-painted if there is no lead-base paint. But it’s the same thing with a fence. A fence does not need to be painted when it is brand new, but if someone did paint it in the past, and now there is chipping paint, it needs to be cured. Of course maybe the best solution is to remove all paint and leave the shingles as they are (or removing all shingles might work too), but make sure that is okay with the appraiser if that is what you plan to do. You can always roll the dice to see if the appraiser calls for repairs too as sometimes items are not called out even though they should be. I might suggest too calling 800-CALL-FHA just to see if they might give special attention to your circumstance.

      The flooring shouldn’t be an issue. It is something that you might want to fix eventually, but it’s hard to imagine an appraiser asking for this to be repaired.

  4. LAUREN says

    Hi Ryan,

    I purchased a 2 story, 3 bedroom, 1.5 bath Townhome in October 2013, which was built in 1978. Right after I bought it, I noticed the paint started peeling off down to sheetrock. I was able to scrape entire walls from corner to corner. First it was only 1 room, but now, 2 years later, every room has this issue and ceilings are now following suit. I have been fixing the place myself, since I was told by my condo association that this is happening throughout the complex, and all that all I needed to do was scrape, spackle, and sand the walls. I have muscular dystrophy and I worry that this is effecting my heath. I’ve been getting my tired and fatigued, and find I have trouble breathing and no energy with little activity. I would really like to have my place checked for this. Can you tell me who I could contact or where I can my paint tested?

    Thank you very much for your time,


    • says

      Hi Lauren. I’m so sorry to hear about your situation. I wonder what the association says the problem is since it is happening throughout. Have you asked this? I would definitely want them to explain why this is happening. I am not sure who to refer, but if you are looking to have your paint tested you might consider reaching out to your local Realtor association, chamber of commerce, maybe a local real estate agent who might know someone, or go to a search engine like Google and search under something like “lead-based paint removal company” or “company to test lead-based paint ____________” (enter your city in the blank space). I wish you the best and I hope your health shows dramatic improvement in coming time. Blessings to you.

  5. Nick says

    My fha and underwriting wants me to sign a paper saying that I have been informed of the lead based paint etc. And that I am aware of this. My question is how do I write something like that to Underwriting?

    • says

      Hi Nick. If they want you to sign something, ask them for something to sign. They should produce a document rather than rely on someone else to make something up. I imagine they have a document or at least a statement you can use.

  6. melissa says

    Hi Ryan,

    My husband and I are buying a home with an FHA loan. The house was built in 1931 and the paint was peeling off the aluminum siding. We were told we needed to address that before the appraisal, so my husband went over to the house to paint (we had an agreement to do so). We only had tiny paint chips to work with to try to match the color at Home Depot. They tried to match it the best they could, but it came out too dark. My husband went over today and painted the chipped parts on the front of the house. The color is a couple of shades darker, and the paint job was alright. Will this matter in the appraisal? Can the appraiser appraise our house lower because of the paint job to repair the chipped paint?

    Thank you for your advice.

    • says

      Hi Melissa. Thanks for reaching out. Honestly, I would be surprised if the appraiser called for the exact shade. Unless there was an obvious impact to marketability, this shouldn’t be an issue. It would be nearly impossible to prove there was actually a marketability impact if we are talking about a small area anyway. The appraiser is very likely going to keep the big picture in mind and sign off on the repair unless there is some other issue I am not aware of. Remember, the paint was very likely called out more of a matter of FHA safety rather than because it impacted the value.

  7. Kcoe says

    Hey! I have a question for you. We are buying a home that was built in 1926. The owner now bought it in 2000 and added a wooden fence to the backyard. For cosmetic purposes they painted only the front part of the boards that face the street. The backside of those boards along with the entire rest of the fence is just bare wood. It’s treated but it’s bare, no paint. The painted part is now starting to chip. We had our appraisal done and it came back subject to scraping and painting the parts that are chipping in the paint. But is it really necessary since its paint over treated wood and it’s not lead based? Or are they asking us to paint the entire fence since its bare? Help!

    • says

      Hi Kcoe. If there is chipping paint it should be scraped and painted. Keep in mind the portions that are chipping are the issue as opposed to re-painting absolutely everything. This may be a pain, but hopefully just a few portions need some work as opposed to everything. The owner could have left the fence bare and it would have been fine, but since it was painted and there is now defective paint, it needs to be cured. It sounds like the appraiser is not asking you to re-paint the other side that is bare because it is treated wood (which is fine). Ultimately it sounds like you need some clarity for what the appraiser is really asking. I might recommend having the loan officer reach out to the lender to seek clarity so you can figure out what is being required. Based on what you said it sounds like the entire fence is not in need of paint, though I could be wrong.

  8. Jenny says

    Hi Ryan,

    I’m purchasing a log home that was built in 1984 with an FHA first time home buyers loan and I have a 203k streamline loan to fix the roof. The deck on this home has paint that is peeling and the appraiser & my lender said this has to be fixed. My lender said I now have to hire a contractor to scrape and paint the deck and “roll it in” to my 203k loan. My question is: can’t I just do it myself or if I must hire someone, can’t I just pay for it out of pocket?

    Thank you,

    • says

      Hi Jenny. I would ask your lender where the FHA manual states who has to do the job. I am not exactly sure, though I believe the person doing it has to be a skilled and probably licensed person. They may be right in this case, but I would still ask them to show you in writing. Or you can download the FHA 4000.1 manual online and find the 203K section to see if you can find it yourself. Being that this is a repair that has to be met prior to the 203K being full finished, it has to be done before the lender signs off on the loan. Sorry I couldn’t be more help as this is more in line with something a loan officer or 203K consultant would know. As an appraiser I’m not really on that end of the deal. Best wishes.

  9. Yorn says

    Hello Ryan,

    We have a stucco house that is currently under contract. The outside of our house had some water damage but we took care of it. We had someone came out to take of it and he applied a sealeant but we didn’t paint it. Our real estate agent told us that we have to paint it because our buyers has an FHA loan. She said it was considered a safety issue. The home was built in 2005 and there is no chipping or peeling.

    My question is, do I have to paint the exterior still?

    • says

      Hi Yorn. The FHA standard has to do with bare wood because without paint or a sealant the bare wood can rot and create some problems. Bare stucco is not in this same category at all, so this rule does not apply. It sounds like your agent means well, but it is not considered a safety issue. I suppose an appraiser could make the case the bare stucco is a marketability issue for the home, which means it should be painted. But if we are talking about a minor portion, that may be a stretch as the cost-to-cure is very minimal. If it is a major area, it’s likely best to paint it. Your house may show better too. I hope that helps.

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