Conventional Loan Home Condition Requirements

May 24, 2024

When planning to purchase a home using a conventional loan, understanding the conventional loan home condition requirements is important. These requirements ensure that the condition of the property meets specific standards before a loan is approved. 

In this blog, we will explore the conventional loan home condition requirements for 2024, offering a comprehensive guide for anyone looking to buy a home using this type of financing.


Table of Contents

  1. What Are Conventional Loan Home Condition Requirements?
  2. 5 Key Condition Requirements for a Conventional Home Loan
  3. Conventional Loan Limits for 2024
  4. The Role of Home Inspections and Appraisals
  5. Financial Implications of Home Condition on Loan Approval
  6. Credit Score and Loan Approval
  7. Conclusion
  8. Conventional Loan Home Condition Requirements FAQs


What Are Conventional Loan Home Condition Requirements?

A conventional loan, unlike those insured by the Federal Housing Administration (FHA), is not backed by the government. This means the lender bears more risk, which translates to stricter appraisal requirements and condition requirements to protect the lender’s investment. 

The condition of the property is assessed during the appraisal and additional home inspections to ensure the structural integrity of the home and the functionality of critical systems.


5 Key Condition Requirements for a Conventional Home Loan

Here are the key condition requirements for a conventional home loan:

Structural Integrity

One of the primary concerns during the appraisal is the structural integrity of the building. The home must be free from significant structural damages such as foundation cracks, sagging roofs, and other issues that could affect the stability and safety of the property.

Electrical Systems

The electrical systems must be up to code and in good working condition. This includes proper wiring, no exposed wires, functioning circuit breakers, and safe outlets. Faulty electrical systems pose a safety risk and affect the loan approval process.


The roof should be in good condition, with no signs of leaks or missing shingles. A roof that is near the end of its life may require repairs or replacement as part of the negotiation repairs with the seller before finalizing the loan.

Plumbing and Heating

Functional plumbing and heating systems are required. Issues like leaking pipes, poor water pressure, or a malfunctioning furnace can be red flags during a home appraisal.

General Maintenance

Overall, the house should be in good repair. This includes working windows, no significant damages to the interior or exterior, and a well-maintained yard. Poor maintenance can be a signal of deeper, unseen issues with the property.


Conventional Loan Limits for 2024

Baseline Loan Limits – The baseline limit for a single-family home has increased, allowing borrowers in most areas to access more funding under conventional loan terms.

High-Cost Area Limits – Higher limits are set for regions with above-average real estate prices, helping buyers in expensive markets avoid the need for jumbo loans.

Impact on Buyers – The revised limits expand affordable financing options, promoting broader homeownership across various U.S. regions.


What is the Purpose of Home Inspections and Appraisals in the Homebuying Process?

While conventional loans do not always require a home inspection, getting one is highly advisable to ensure peace of mind and a thorough understanding of the property’s condition. A home inspector can provide detailed insights that might not be covered in an appraisal. 

For example, while an appraisal focuses on determining the value of the home for the loan amount, a home inspection provides a deep dive into the condition of the home, examining everything from the foundation to the roof.

Conventional loan appraisal and inspection reports can also provide leverage to negotiate repairs with the seller. If issues are identified, buyers can request repairs or adjustments to the sale price to account for necessary fixes.


Financial Implications of Home Condition on Loan Approval

The condition of the home affects not only the loan approval but also the loan terms and the buyer’s financial planning. Homes in better condition are likely to appraise higher and may lead to more favorable loan conditions. Conversely, properties requiring significant improvements may face challenges in loan approvals or attract higher interest rates to mitigate lender risks.


Implications for Buyers 

For buyers, understanding the conventional loan home condition requirements is key to a smooth purchasing process. Knowing what appraisers and inspectors look for can help buyers anticipate potential issues and address them proactively.


Implications for Sellers

Sellers, on the other hand, can benefit from ensuring their property meets these requirements before listing. This not only facilitates a quicker sale but can also potentially increase the property’s market value. Addressing issues beforehand reduces the back-and-forth negotiation related to property conditions during the sales process.


Credit Score and Loan Approval

While the credit score does not directly impact the conventional loan home condition requirements, it plays a crucial role in the overall loan approval process. A higher credit score can influence the loan terms, potentially resulting in better interest rates and lower down payments. 

Therefore, maintaining a good credit score is beneficial when applying for any loan, including a conventional mortgage.



Navigating the conventional loan home condition requirements can seem daunting, but understanding these criteria can significantly smooth the process of buying a home. Whether you are a buyer or a seller, being informed helps you manage expectations and prepare adequately, ensuring that the real estate transaction proceeds as smoothly as possible.

By familiarizing yourself with these requirements and actively preparing for the appraisal and inspection processes, you can enhance your chances of a favorable outcome in the loan approval process, bringing you one step closer to acquiring or selling a home with confidence.


Conventional Loan Home Condition Requirements FAQs

Why might a home fail a conventional loan appraisal?

A home might fail a conventional loan appraisal if it has significant structural issues, outdated or unsafe electrical systems, or if the appraisal value comes in lower than the selling price, indicating that the home may not be a secure investment for the lender.


What should I do if the home inspection reveals problems?

If the home inspection reveals problems, you can negotiate with the seller to make repairs, adjust the purchase price, or possibly cancel the agreement if the issues are too significant to resolve satisfactorily.


Are there specific components that are scrutinized more during the appraisal for a conventional loan?

Yes, certain components such as the roof, foundation, HVAC system, and overall structural integrity are scrutinized more during the appraisal for a conventional loan, as these have a significant impact on the safety, functionality, and value of the home.


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About Rob Sturms

With over three decades of experience, Rob Sturms is a trusted name in Colorado’s mortgage industry. Since 1993, he has been guiding clients with honesty and expertise through various loan options, ensuring personalized solutions for each homeowner’s journey. As the founder of Rob’s Mortgage Loans, Rob’s commitment to transparency and tailored service makes him the go-to choice for reliable lending assistance.

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