If the home has some areas of the paint deterioration, can FHA stop the loan?

Yes if the appraiser so notes it, generally the loan can be approved subject to the area being repainted prior to close. A final sign off by the appraiser after the repainting is done is called for, which will incur an additional fee ($100 usually).There may be other non-FHA programs which will work with 3% down payment and the requirements are not quite so picky if the borrower qualifies as a 1st time home buyer and does not exceed income guidelines. Feel free to call me at 970-748-0342 to discuss, or see my website www.mtnmortgageguy.com to learn more about me.

Chris is correct. The appraisal will most likely be "subject to" the repair of those items. The loan may proceed through to loan signing, and the appraisers re-inspection can be submitted just prior to funding.

Only if the appraiser notes it on your appraisal. If he/she did, it would most likely be a subject to appraisal. Meaning the appraisal would come back saying this property is valued at $xxxxxxx subject to the following item(s) being done. Then those items would need to completed prior to closing and the appraiser would need to go back out to reinspect for completion. The appraiser will charge to go back out to the property, usually $75.00 to $150.00. This could delay your closing if it's done too late, so it's best to get the appraisal done right away so you and the seller can address any issues right away. If you have any additional questions I am more than happy to help. 303-521-7169, Sean

The FHA appraiser has a duty to notate any property deficiencies that have to do with safety or health concerns like broken windows, exposed wired, evidence of mold, including pealing paint. The appraiser will still apprise the property but make the valuation "Subject To" the deficiencies being corrected.. unless the deficiencies are corrected, FHA will not lend on that property.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com