Kentucky USDA Loan Guide · Updated September 2026

A USDA appraisal does two jobs: it confirms the home is worth the price, and it confirms the home meets HUD’s minimum property standards. Use the checklist below before you make an offer and again before the appraiser arrives, so repairs don’t push back your closing.

USDA appraisal requirements at a glance

  • Standard: the home must meet HUD Handbook 4000.1 minimum property standards: safe, sound and sanitary.
  • Appraiser: licensed or certified in Kentucky and familiar with HUD 4000.1. The appraiser certifies on the report that the home meets those standards.
  • Validity: the appraisal must be completed within 180 days of closing. Older appraisals can be updated.
  • Repairs: anything the appraiser flags must be fixed and re-inspected, or handled through a repair escrow if the lender allows it.
  • Home inspection: not required by USDA, but strongly recommended.

Source: USDA HB-1-3555, Chapter 12 (Property and Appraisal Requirements).

How the USDA appraisal works

  1. Your lender orders the appraisal after the purchase contract is signed.
  2. The appraiser inspects the home, pulls comparable sales and determines market value.
  3. If the home has deficiencies, the report is issued “subject to” repairs.
  4. The repairs are completed, usually by the seller, and the appraiser re-inspects.
  5. The appraiser signs off, and the file moves on to underwriting and USDA review.

USDA appraisal and inspection checklist

Walk the house with this list. Anything you can’t check off is a likely repair item.

Safety and access

  • ☐ Handrails on interior and exterior stairways
  • ☐ Guardrails on decks, porches and landings that need them
  • ☐ No exposed wiring; junction boxes covered
  • ☐ Every bedroom has a window or door that opens to the outside
  • ☐ Year-round vehicle access to the home
  • ☐ No nearby hazards (leaking tanks, contamination, high-voltage lines over the house)

Exterior and roof

  • ☐ Roof keeps water out, with no active leaks or missing shingles
  • ☐ Siding intact, no holes or rot
  • ☐ No chipped or peeling paint on homes built before 1978
  • ☐ Gutters, chimney, steps and porches sound
  • ☐ Foundation free of major cracks or settling
  • ☐ Pool (if any) meets local safety code

Systems and utilities

  • ☐ All utilities on for the appraisal: water, electric, gas and heat
  • ☐ Heating system works and heats the living area
  • ☐ Water heater works, with a proper relief valve
  • ☐ Electrical panel safe, with working outlets and lights in every room
  • ☐ No active plumbing leaks

Kitchen and baths

  • ☐ Working sink with hot and cold water
  • ☐ Appliances that convey with the sale are working
  • ☐ Toilets, tubs and showers work without leaks
  • ☐ Bathrooms vented (exhaust fan or window)

Crawl space and basement

  • ☐ No standing water or active moisture
  • ☐ Crawl space accessible for the appraiser
  • ☐ No visible wood rot, damaged joists or insect damage

Before the appraiser arrives

  • ☐ Utilities confirmed on (vacant and foreclosed homes)
  • ☐ Attic and crawl space accessible
  • ☐ Obvious small repairs done: paint, handrails, outlet covers
  • ☐ Well water test ordered, if the home has a well

Well and septic requirements for USDA loans

Many rural Kentucky homes have a private well or septic system. USDA’s rules:

  • Well water test: performed by the local health department or a state-certified lab. The water must meet state or local standards, or EPA limits where no local standard exists. The test report can be no more than 180 days old at closing.
  • Well location: the well should be on the property. A well on a neighbor’s land needs recorded water rights and a maintenance agreement.
  • Well-to-septic distance: must meet HUD 4000.1 or be approved by the local or state health authority.
  • Septic: if a qualified appraiser certifies the home meets HUD standards, no separate septic certification is required. The system must show no evidence of failure and must sit entirely on the property, or have a recorded easement.
  • Shared wells: allowed only when public water isn’t feasible, and they need a continuous, safe supply plus a shared-well agreement.

Is a termite inspection required for a USDA loan?

Only when the lender, the appraiser, a home inspector or state law requires one. It’s most often triggered when the appraiser sees signs of damage. Many lenders order one on existing homes anyway, so ask early and budget roughly $75 to $150 for it.

USDA appraisal vs. home inspection

USDA appraisalHome inspection
Required?YesNo, but recommended
Who it protectsThe lender and USDAYou, the buyer
What it checksValue, plus visible health and safety issuesDetailed condition of roof, systems, structure and components
Can require repairs?YesNo, but its findings help you negotiate

Your lender must give you HUD’s For Your Protection: Get a Home Inspection notice. Take the advice: the appraisal is not a full inspection.

What if the home needs repairs?

Most repairs are completed before closing and re-inspected by the appraiser. USDA also allows a repair escrow in limited cases:

  • The home must be livable at closing.
  • The unfinished work must be minor, or delayed by weather, and cost no more than 10% of the loan amount.
  • Repairs must be finished within 180 days of closing. Exterior work delayed by weather can be extended to 240 days.

Not every lender offers repair escrows. If you think the home needs work, tell me before you write the offer.

How long does a USDA appraisal take in Kentucky?

Plan on about one to two weeks from order to report, and longer in some rural counties or when the appraiser needs to come back to re-inspect repairs. The appraisal is only one step. See how long a Kentucky USDA loan takes to close for the full timeline, and check today’s USDA turn times for the current USDA review queue.

USDA appraisal FAQs

Does USDA use the same appraisal standards as FHA?

Yes. USDA uses HUD Handbook 4000.1 minimum property standards, the same standards used for FHA.

Who pays for the USDA appraisal?

The buyer typically pays it upfront or at closing. Sellers can pay closing costs as part of the contract.

What happens if the appraisal comes in low?

You can renegotiate the price, bring cash to cover the gap, or cancel if your contract has an appraisal contingency. (When the appraisal comes in above the price, USDA can finance closing costs up to the appraised value.)

How long is a USDA appraisal good for?

It must be completed within 180 days of closing. An older appraisal can be updated rather than redone.

Joel Lobb, Mortgage Loan Officer, NMLS #57916 | EVO Mortgage, Company NMLS #1738461. Equal Housing Lender. Call or text 502-905-3708.

This content is for educational purposes only and is not a commitment to lend. Loan approval is subject to credit, underwriting, property and program guidelines. Not affiliated with USDA or any government agency.