Construction and New Homes:
Construction Definitions

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Chapter 1
Appraisal and Property Requirements
Page 1-08b

A complete list of items required for high/low ratio loans found in HUD Handbook 4145.1 Appendix 11.

1. Proposed Construction are properties approved for mortgage insurance prior to the beginning of construction. This means that the DE Statement of Appraised Value or Early Start letter has been issued by the DE Underwriter for the property prior to pouring of the footing. For high ratio loans, provide either the appraisal or Early Start letter AND at least three inspections (initial, framing and final) by a HUD fee approved panel inspector or approved local jurisdiction. When the inspections are performed by a HUD approved fee panel inspector the form HUD-92051 Compliance Inspection Report must be completed and submitted in the case binder. If the above items are not provided, evidence of an approved ten year warranty and a final inspection are required for high ratio loans.

2. Under Construction are properties that are under construction and are not complete at the time of the appraisal. For high ratio loans, provide final inspection by a HUD approved inspector or approved local jurisdiction AND evidence of an approved ten year warranty. (NOTE: For properties under construction, three local inspections do not allow for maximum financing unless combined with an approved ten year warranty.) Under Construction status is in effect with the first placement of concrete through the point of being 100% complete.

3. Existing Construction (less than one year old) (new, prior occupancy has no bearing)properties that are less than one year old. If no repair or correction conditions are made by the appraiser, the appraisal serves as the final inspection as per HUD Handbook 4145.1 Paragraph 6-3-A(3). A ten year warranty is required in the case binder for maximum financing.

	Introduction
	Construction definitions
	General requirements
	Minimum property standards
	Subdivision approvals
	Final inspection on properties