Buying a home comes with a lot of moving parts.

First, you find the house.

Then, you make an offer, get under contract, schedule your inspection, and continue working with your lender.

At some point, you may hear about a repair that needs to be completed before your loan can close.

That can be confusing.

You may wonder, “Didn’t we already have the home inspected?”

The answer is that a home inspection and a lender or loan-related repair requirement serve different purposes.

Understanding the difference can help you know what to expect during your transaction.

Your Home Inspection Is For You

A home inspection is designed to help you understand the condition of the home you are buying.

Your inspector looks at many parts of the property. They may identify items that need repair, maintenance, or further evaluation.

Some problems may be small.

Others could be more significant.

The inspection gives you information so you can make an informed decision about the purchase.

It does not mean the seller automatically has to fix everything the inspector finds.

Instead, the inspection results can become part of your negotiations with the seller.

A Lender Has a Different Concern

Your lender has a different job.

The lender needs to make sure the property meets the requirements of the loan being used to purchase it.

Depending on your loan program and the property, certain conditions may need to be addressed before the loan can move forward.

For example, VA loans have Minimum Property Requirements designed to help ensure that a property is safe, structurally sound, and sanitary. VA also makes clear that an appraisal is not the same as a home inspection.

That means you could have two different conversations happening at the same time.

Your inspector is looking at the home for your benefit.

The appraisal and loan process may identify issues that affect the financing.

What If My Inspector Finds Something the Lender Doesn’t Require?

This happens.

Your inspector may find several items that need attention.

However, that does not automatically mean the lender will require those items to be repaired before closing.

You may still want the seller to address some of them.

For example, your inspector could find an older roof, a plumbing issue, or a maintenance concern.

Even if the lender does not require a repair, you may decide that the issue is important enough to negotiate.

That is where your inspection contingency and your negotiations become important.

What If the Lender Requires Something My Inspector Didn’t Find?

This can happen, too.

The appraisal process may identify a condition that needs to be addressed for the loan.

That can come as a surprise to a buyer.

You may think, “But the inspector didn’t mention that.”

Remember, the inspector and appraiser are performing different jobs.

A home inspector is looking at the condition of the property in much greater detail. An appraiser is primarily determining the property’s value, while certain loan programs may also require the appraiser to identify property conditions that do not meet program standards.

For VA loans, for example, the appraiser can identify repairs needed to meet Minimum Property Requirements.

Does the Buyer Have to Pay for the Repair?

Not necessarily.

This is an important distinction.

If a lender or loan program requires a repair, that does not automatically mean the buyer must pay for it.

Who completes or pays for a repair can depend on the purchase contract, negotiations, the loan program, and the lender’s requirements.

That is why you should talk with your real estate broker and lender as soon as a financing-related repair comes up.

Don’t assume that you have to write a check for the repair.

What Happens If a Repair Is Required?

The first step is to understand why the repair is required.

Ask your lender what requirement is creating the issue.

Then, ask what needs to happen before the loan can close.

Your real estate broker can help you understand how the repair may affect your purchase contract and negotiations.

Your lender can explain the loan requirement.

Together, they can help you determine the next step.

What If the Seller Doesn’t Want to Make the Repair?

This is where things can get more complicated.

The seller may not want to make the repair.

However, you may need the repair completed in order for your financing to move forward.

At that point, your options may depend on the loan program, your contract, and your negotiations with the seller.

There may be ways to negotiate the repair, change the terms of the transaction, or explore another solution with your lender.

The important thing is to address the issue quickly.

Different Loans Can Have Different Requirements

Not every loan works the same way.

FHA, VA, conventional, and other loan programs can have different property and underwriting requirements.

In addition, lenders can have their own requirements.

For that reason, I would not assume that something is always required simply because you heard it was required on another transaction.

Your lender should explain the requirements for your specific loan.

The Inspection and Appraisal Are Both Important

As a buyer, you should not think of the inspection and appraisal as competing processes.

They serve different purposes.

Your inspection helps you understand the condition of the home.

The appraisal helps establish the property’s market value. Depending on the loan program, it may also identify certain property conditions that need to be addressed.

The VA specifically recommends that buyers have a home inspection because an appraisal is not a substitute for one.

Both can be important parts of protecting yourself during a purchase.

What Should You Do as a Buyer?

If a repair comes up during your transaction, don’t panic.

Instead, ask questions.

Here are a few good ones:

• Why is this repair being required?
• Is the requirement coming from the lender, the loan program, or the appraisal?
• Does the repair have to be completed before closing?
• Who is expected to complete the repair?
• Who is expected to pay for it?
• Will there need to be a reinspection?
• Could the repair affect our closing date?
• What happens if the seller does not agree to make the repair?

These questions can help you understand what is happening before you make a decision.

Don’t Confuse an Inspection With a Loan Requirement

This is probably the biggest takeaway for buyers.

Your inspection tells you about the home.

A lender or loan program requirement can affect whether your financing can move forward.

Those are two different things.

A long inspection report does not mean every item must be repaired.

Likewise, a lender or loan program may require something that was not a major concern on your inspection.

Understanding that difference can make the process much less stressful.

Kolleen’s Perspective

As a buyer, you should not have to figure this out on your own.

When an inspection issue, appraisal condition, or lender requirement comes up, I want my buyers to understand what it means, who is responsible, and what options they have.

Your lender is the best person to explain your specific loan requirements.

Your inspector can explain what they found during the inspection.

And your real estate broker can help you understand the contract, negotiations, and how the issue may affect the transaction.

Each professional has a different role.

Together, they help you make an informed decision.