Most borrowers don’t think utilities matter until an appraisal or underwriting review puts the loan on hold.
For FHA loans, utilities are not just a technical detail. Whether water, gas, and electricity are on at the time of appraisal can directly affect approval, required inspections, and closing timelines.
This article explains what FHA actually requires, why utilities matter, and what happens if they’re off.
In this article, we’ll break down what actually matters, what causes problems, and what borrowers usually misunderstand.
Utilities really need to be turned on?
Yes, in most cases FHA requires all utilities to be on and functioning at the time of appraisal.
The appraiser must verify that the property’s systems are operational so the home can be evaluated for safety, soundness, and livability. If utilities are off, the appraiser often cannot complete required testing.
Why Utilities Matter for FHA Appraisals
FHA appraisals are not just value opinions. They are also condition and safety evaluations.
Without utilities turned on, the appraiser cannot properly test key systems, including plumbing, electrical, heating, and water heaters. This creates uncertainty about the property’s condition and increases risk for both the lender and FHA.
What Happens If Utilities Are Off?
If utilities are off at the time of appraisal, several outcomes are possible.
The appraisal may be marked subject to utilities being turned on, a reinspection may be required, and closing timelines can be delayed. In some cases, the appraisal cannot be completed at all until utilities are restored.
Are There Any Exceptions?
There are limited exceptions, often involving vacant or winterized properties, but they are not automatic.
Any exception must be clearly documented and acceptable to both the lender and FHA guidelines. Even when exceptions are allowed, many lenders still require utilities to be on before final approval.
How to Avoid FHA Appraisal Delays
The easiest way to avoid appraisal and underwriting delays is to ensure all utilities are on before the appraisal is scheduled.
Confirm that water, gas, and electricity are active and accessible, and communicate with the appraiser ahead of time if there are any concerns. This simple step prevents one of the most common FHA-related hold-ups.