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FHA New Construction

FHA defines new construction as properties processed as proposed construction, under construction, and existing less than one year old. Proposed construction exists only in the building plan and the actual construction is yet to begin. After the placement of first concrete or other permanent materials a property may qualify as an under construction project. Existing construction properties are 100 percent complete in all aspects.

For a high ratio loan, pre-approval is required before the construction begins and there must be initial, framing and final inspections. In the event of a property not being pre-approved, a final inspection and a 10-year warranty is the necessity for a high ratio loan.

A pre-approval process may involve appraisal before the start of construction, issuance of Building Permit & Certificate of Occupancy, or in the case of a condo or a manufactured housing an Early Start Letter, and certification to ensure 100 percent completion of the property using the form HUD 92900-A.

FHA New Construction Appraisal Requirements



A number of different forms are used to certify the compliance of FHA new construction guidelines. These guidelines may be different for different housing types and for condos. Moreover, there are issues like appraisal requirements and termite that must be addressed according to the guidelines of US Department of Housing and Urban Development before a lender can close a transaction. The appraisal report must include a statement that the said property is in conformance with the submitted construction exhibits.

FHA New Construction Forms



The various FHA New Construction Forms used during a typical loan processing system may include HUD-92800.5b, HUD-92900-A, HUD-92051, HUD-92541 and HUD-92544. The HUD Handbook 4145.1 and the Mortgagee Letters 1995-11, 2001-27, and 2005-09 contain guidelines and all required information that a user might want to know about the process. One can find appraisal checklist and information of new construction disclosures as well using the online resources made available by the US Department of Housing and Urban Development.

FHA New Construction Termite



The areas where the prevalence of termite or other wood destroying insects is known, the builders are required to complete HUD-NPCA-99-A form indicating the treatment method used to protect the property. These treatment methods for termite may include bait system, preservative treated wood and chemical soil treatment. For more information in this regard refer to Handbook 4150.1.


Browse our website fha.realestatezing.com to know about every aspect of Federal Housing Administration. For even more information visit the official website of the US Department of Housing and Urban Development.

Website: www.hud.gov




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