source:
  type: guide
  id: fnma-sel-b4-1.3-06
  authority: Fannie Mae Selling Guide B4-1.3-06 — Property Condition and Quality of
    Construction of the Improvements
  description: Fannie Mae Selling Guide B4-1.3-06 — Property Condition and Quality
    of Construction of the Improvements.
  coverage_tier: operative
obligations:
- id: fnma-sel-b4-1.3-06-full
  canonical_id: fnma-sel-b4-1.3-06-full
  section: Fannie Mae Selling Guide B4-1.3-06 — Property Condition and Quality of
    Construction of the Improvements
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B4-1.3-06 — Property Condition and Quality
      of Construction of the Improvements
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B4-1.3-06, Property Condition and Quality of Construction of
      the Improvements (06/04/2025) Introduction This topic contains information on
      property condition and quality of construction, including: Appraiser Selection
      of Condition, Quality, and other Characteristic Ratings Property Condition Property
      Condition Ratings Identifying Property Condition Deﬁnitions of Not Updated,
      Updated, and Remodeled Appraisals Completed “As Is” Quality of Construction
      Rating Identifying Quality of Construction Physical Deﬁciencies That Aﬀect Safety,
      Soundness, or Structural Integrity of the Subject Property Infestation, Dampness,
      or Settlement Uniform Appraisal Dataset (UAD) 3.6 Policy Appraiser Selection
      of Condition, Quality, and other Characteristic Ratings The condition and quality
      ratings must be based on a holistic view of the property and any improvements.
      When selecting the condition and quality ratings, an appraiser must consider
      all improvements to determine an overall condition and quality rating. The appraiser
      should select the rating that best reﬂects the property as a whole and in its
      entirety. describe the subject property as of the eﬀective date of the appraisal
      on an absolute basis, meaning the property must be rated on its own merits.
      The rating should not be selected on a relative basis, meaning it is not selected
      on how the property relates or compares to other properties in the neighborhood.
      Additionally, the condition and quality ratings for comparable properties must
      be made on an absolute basis (again, each comparative property on its own merits),
      not on a relative basis, and reﬂect the property as of the date of sale of that
      comparable property. Note: These requirements also apply to all other ratings
      or descriptions, including the View and Published May 6, 2026 570 Location.
      When an appraiser selects a rating and/or description of the subject property
      for a sales transaction, the selected rating and/or description must remain
      the same when reﬂecting that speciﬁc transaction. For example, if a C4 rating
      is selected for the sale of the subject property, then that property remains
      a C4 when using that speciﬁc sale as a comparable in future reports. The same
      expectation holds true for ratings and descriptions of comparable sales. When
      a comparable is used in a subsequent appraisal, the ratings and descriptions
      of that property should not change from one appraisal to the next when it reﬂects
      the same sale transaction. Note: Properties can have the same rating or description
      and still require an adjustment. It should be noted this not only applies to
      condition and quality ratings but can apply to other ratings or descriptions
      as well. For example, all water views may not be equal. In this instance, an
      adjustment should be made and explained in the Additional Comments section of
      the form or in an addendum. Property Condition Lenders must take the necessary
      steps to conﬁrm that a property meets Fannie Mae’s condition requirements as
      outlined in this topic. The table below provides the requirements for property
      condition. ✓ Requirements The appraisal report must express an opinion about
      the condition of the improvements based on factual data of the improvements
      analysis. Appraisals based on interior and exterior inspections must include
      complete visual inspections of the accessible areas of the property. Note: Appraisers
      are not responsible for hidden or unapparent conditions. Appraisal reports must
      reﬂect adverse conditions that were apparent during the inspection or discovered
      while performing research, such as, but not limited to, needed repairs, deterioration,
      or the presence of hazardous wastes, toxic substances, or adverse environmental
      conditions. Detrimental conditions of the improvements must be reported in the
      appraisal even if the conditions are typical for competing properties. The appraiser
      must consider and describe the overall condition and quality and condition of
      the property improvements. (See Identifying Property Condition; Deﬁnitions of
      Not Updated, Updated, and Remodeled; and Identifying Quality of Construction
      in this topic for details.) Published May 6, 2026 571 ✓ Requirements The appraiser
      must identify • items that require immediate repair; and • items where maintenance
      may have been deferred, which may or may not require immediate repair. The appraisal
      Additional Comments section must address needed repairs and physical, functional,
      or external inadequacies. Property Condition Ratings For appraisals required
      to be completed with the UAD, the appraiser must assign one of the following
      standardized condition ratings in the table below when identifying the condition
      of the improvements for the subject property and comparable sales. Rating Description
      C1 The improvements have been very recently constructed and have not previously
      been occupied. The entire structure and all components are new and the dwelling
      features no physical depreciation. Note: Newly constructed improvements that
      feature recycled materials and/or components can be considered new dwellings
      provided that the dwelling is placed on a 100 percent new foundation and the
      recycled materials and the recycled components have been rehabilitated/re-manufactured
      into like-new condition. Improvements that have not been previously occupied
      are not considered “new” if they have any signiﬁcant physical depreciation (that
      is, newly constructed dwellings that have been vacant for an extended period
      of time without adequate maintenance or upkeep). C2 The improvements feature
      no deferred maintenance, little or no physical depreciation, and require no
      repairs. Virtually all building components are new or have been recently repaired,
      reﬁnished, or rehabilitated. All outdated components and ﬁnishes have been updated
      and/or replaced with components that meet current standards. Dwellings in this
      category either are almost new or have been recently completely renovated and
      are similar in condition to new construction. Note: The improvements represent
      a relatively new property that is well-maintained with no deferred maintenance
      and little or no physical depreciation, or an older property that has been recently
      completely renovated. Published May 6, 2026 572 Rating Description C3 The improvements
      are well-maintained and feature limited physical depreciation due to normal
      wear and tear. Some components, but not every major building component, may
      be updated or recently rehabilitated. The structure has been well-maintained.
      Note: The improvement is in its ﬁrst-cycle of replacing short-lived building
      components (appliances, ﬂoor coverings, HVAC, etc.) and is being well– maintained.
      Its estimated eﬀective age is less than its actual age. It also may reﬂect a
      property in which the majority of short-lived building components have been
      replaced but not to the level of a complete renovation. C4 The improvements
      feature some minor deferred maintenance and physical deterioration due to normal
      wear and tear. The dwelling has been adequately maintained and requires only
      minimal repairs to building components/mechanical systems and cosmetic repairs.
      All major building components have been adequately maintained and are functionally
      adequate. Note: The estimated eﬀective age may be close to or equal to its actual
      age. It reﬂects a property in which some of the short-lived building components
      have been replaced, and some short-lived building components are at or near
      the end of their physical life expectancy; however, they still function adequately.
      Most minor repairs have been addressed on an ongoing basis resulting in an adequately
      maintained property. C5 The improvements feature obvious deferred maintenance
      and are in need of some signiﬁcant repairs. Some building components need repairs,
      rehabilitation, or updating. The functional utility and overall livability are
      somewhat diminished due to condition, but the dwelling remains useable and functional
      as a residence. Note: Some signiﬁcant repairs are needed to the improvements
      due to the lack of adequate maintenance. It reﬂects a property in which many
      of its short-lived building components are at the end of or have exceeded their
      physical life expectancy, but remain functional. C6 The improvements have substantial
      damage or deferred maintenance with deﬁciencies or defects that are severe enough
      to aﬀect the safety, soundness, or structural integrity of the improvements.
      The improvements are in need of substantial repairs and rehabilitation, including
      many or most major components. Note: Substantial repairs are needed to the improvements
      due to the lack of adequate maintenance or property damage. It reﬂects a property
      with conditions severe enough to aﬀect the safety, soundness, or structural
      integrity of the improvements. Identifying Property Condition Published May
      6, 2026 573 As previously noted, the condition rating selected for the property
      must reﬂect a holistic view of the condition of the property improvements. It
      would be inappropriate to select either a lower or higher overall rating on
      the basis of one or two minor inferior or superior areas of the property improvements.
      However, the C6 rating is an exception because it indicates that the property
      is impacted by one or more deﬁciencies that negatively aﬀect the safety, soundness,
      or structural integrity of the property. As a result, if any portion of the
      dwelling is rated a C6, the whole dwelling must be rated a C6. Loans secured
      by properties with a condition rating of C6 are not eligible for sale to Fannie
      Mae. Any deﬁciencies impacting the safety, soundness, or structural integrity
      of the property must be repaired with a resulting minimum condition rating of
      C5 prior to sale of the loan. See Physical Deﬁciencies That Aﬀect Safety, Soundness,
      or Structural Integrity of the Subject Property in this topic for information
      related to completing appraisals on properties with safety, soundness, or structural
      integrity deﬁciencies. Deﬁnitions of Not Updated, Updated, and Remodeled For
      appraisals required to be completed using the UAD, as a subset of identifying
      the condition of the subject property, the appraiser must also identify the
      level of updating, if any, that the subject property has received by utilizing
      the deﬁnitions in the table below. Level of Updating Description Not Updated
      Little or no updating or modernization. This description includes, but is not
      limited to, new homes. Residential properties of ﬁfteen years of age or less
      often reﬂect an original condition with no updating, if no major components
      have been replaced or updated. Those over ﬁfteen years of age are also considered
      not updated if the appliances, ﬁxtures, and ﬁnishes are predominantly dated.
      An area that is ‘Not Updated’ may still be well-maintained and fully functional,
      and this rating does not necessarily imply deferred maintenance or physical/functional
      deterioration. Updated The area of the home has been modiﬁed to meet current
      market expectations. These modiﬁcations are limited in terms of both scope and
      cost. An updated area of the home should have an improved look and feel, or
      functional utility. Changes that constitute updates include refurbishment and/or
      replacing components to meet existing market expectations. Updates do not include
      signiﬁcant alterations to the existing structure. Published May 6, 2026 574
      Level of Updating Description Remodeled Signiﬁcant ﬁnish and/or structural changes
      have been made that increase utility and appeal through complete replacement
      and/or expansion. A remodeled area reﬂects fundamental changes that include
      multiple alterations. These alterations may include some or all of the following:
      replacement of a major component (cabinet(s), bathtub, or bathroom tile), relocation
      of plumbing/gas ﬁxtures/appliances, signiﬁcant structural alterations (relocating
      walls, and/or the addition of square footage). This would include a complete
      gutting and rebuild. Appraisals Completed “As Is” Fannie Mae permits appraisals
      to be based on the “as is” condition of the property provided existing conditions
      are minor and do not aﬀect the safety, soundness, or structural integrity of
      the property, and the appraiser’s opinion of value reﬂects the existence of
      these conditions. Minor conditions and deferred maintenance are typically due
      to normal wear and tear from the aging process and the occupancy of the property.
      While such conditions generally do not rise to the level of a required repair,
      they must be reported. Examples of minor conditions and deferred maintenance
      include worn ﬂoor ﬁnishes or carpet, minor plumbing leaks, holes in window screens,
      missing handrails, or cracked window glass. Properties with condition ratings
      C1, C2, C3, C4, and C5 as previously deﬁned are eligible in “as is” condition.
      Properties with the initial condition rating C6 indicate one or more deﬁciencies
      that impact the safety, soundness, or structural integrity of the property.
      Therefore, the appraisal must be completed "subject to" completion of the deﬁcient
      item(s) with a minimum resulting condition rating of C5. See Physical Deﬁciencies
      That Aﬀect Safety, Soundness, or Structural Integrity of the Subject Property
      in this topic for additional details when completing appraisals on properties
      with safety, soundness, or structural integrity deﬁciencies. Quality of Construction
      Rating For appraisals required to be completed using the UAD, the appraiser
      must assign one of the following standardized quality ratings in the table below
      when identifying the quality of construction for the subject property and comparable
      sales. Published May 6, 2026 575 Rating Description Q1 Dwellings with this quality
      rating are usually unique structures that are individually designed by an architect
      for a speciﬁed user. Such residences typically are constructed from detailed
      architectural plans and speciﬁcations and feature an exceptionally high level
      of workmanship and exceptionally high-grade materials throughout the interior
      and exterior of the structure. The design features exceptionally high-quality
      exterior reﬁnements and ornamentation, and exceptionally high-quality interior
      reﬁnements. The workmanship, materials, and ﬁnishes throughout the dwelling
      are of exceptionally high quality. Q2 Dwellings with this quality rating are
      often custom designed for construction on an individual property owner’s site.
      However, dwellings in this quality grade are also found in high-quality tract
      developments featuring residences constructed from individual plans or from
      highly modiﬁed or upgraded plans. The design features detailed, high-quality
      exterior ornamentation, high-quality interior reﬁnements, and detail. The workmanship,
      materials, and ﬁnishes throughout the dwelling are generally of high or very
      high quality. Q3 Dwellings with this quality rating are residences of higher
      quality built from individual or readily available designer plans in above-standard
      residential tract developments or on an individual property owner’s site. The
      design includes signiﬁcant exterior ornamentation and interiors that are well
      ﬁnished. The workmanship exceeds acceptable standards and many materials and
      ﬁnishes throughout the dwelling have been upgraded from “stock” standards. Q4
      Dwellings with this quality rating meet or exceed the requirements of applicable
      building codes. Standard or modiﬁed standard building plans are utilized and
      the design includes adequate fenestration and some exterior ornamentation and
      interior reﬁnements. Materials, workmanship, ﬁnish, and equipment are of stock
      or builder grade and may feature some upgrades. Q5 Dwellings with this quality
      rating feature economy of construction and basic functionality as main considerations.
      Such dwellings feature a plain design using readily available or basic ﬂoor
      plans featuring minimal fenestration and basic ﬁnishes with minimal exterior
      ornamentation and limited interior detail. These dwellings meet minimum building
      codes and are constructed with inexpensive, stock materials with limited reﬁnements
      and upgrades. Published May 6, 2026 576 Rating Description Q6 Dwellings with
      this quality rating are of basic quality and lower cost; some may not be suitable
      for year-round occupancy. Such dwellings are often built with simple plans or
      without plans, often utilizing the lowest quality building materials. Such dwellings
      are often built or expanded by persons who are professionally unskilled or possess
      only minimal construction skills. Electrical, plumbing, and other mechanical
      systems and equipment may be minimal or nonexistent. Older dwellings may feature
      one or more substandard or nonconforming additions to the original structure.
      Identifying Quality of Construction The same approach used in identifying the
      condition of the property is also applicable to identifying the quality of construction.
      The selected rating must reﬂect a holistic view of the quality of construction.
      However, the Q6 Rating is an exception because it indicates that the property
      is impacted by one or more deﬁciencies that negatively aﬀect the safety, soundness,
      or structural integrity of the property. As a result, if any portion of the
      dwelling is rated a Q6, the whole dwelling must be rated a Q6. Loans secured
      by properties with a quality of construction rating of Q6 are eligible for sale
      to Fannie Mae provided any items in relation to the quality of construction
      that impact the safety, soundness, or structural integrity of the property are
      repaired prior to the delivery of the loan. See Physical Deﬁciencies That Aﬀect
      Safety, Soundness, or Structural Integrity of the Subject Property in this topic
      for requirements when completing appraisals on properties with safety, soundness,
      or structural integrity deﬁciencies. Physical Deﬁciencies That Aﬀect Safety,
      Soundness, or Structural Integrity of the Subject Property The appraisal report
      must identify and describe physical deﬁciencies that could aﬀect a property’s
      safety, soundness, or structural integrity. If the appraiser has identiﬁed any
      of these deﬁciencies, the property must be appraised "subject to" completion
      of the speciﬁc repairs or alterations. In these instances, the property condition
      and quality ratings must reﬂect the condition and quality of the property based
      on the hypothetical condition that the repairs or alterations have been completed.
      If the appraiser is not qualiﬁed to evaluate the alterations or repairs, the
      appraisal must note the deﬁciencies and be completed "subject to" a satisfactory
      inspection by a qualiﬁed professional. The lender must decide if the inspection(s)
      is required and whether the property meets eligibility requirements. If the
      property does not meet eligibility requirements, the lender must provide satisfactory
      evidence that the condition has been corrected or repaired prior to loan delivery.
      In this case, the appraiser is not required to review the professionally prepared
      report, re-inspect the property, or provide a Form 1004D. The lender must document
      the decision and rationale in the loan ﬁle. See B4-1.4-08, Environmental Hazards
      Appraisal Requirements, for properties aﬀected by environmental hazards. Infestation,
      Dampness, or Settlement Published May 6, 2026 577 If the appraisal indicates
      evidence of infestation (such as, wood-boring insects), dampness, or abnormal
      settlement, the appraisal must comment on the eﬀect on the value and marketability
      of the subject property. The lender must either provide satisfactory evidence
      that the condition was corrected or submit a professionally prepared report
      indicating, based on an inspection of the property, that the condition does
      not pose any threat of structural damage to the improvements. The appraisal
      should be made "subject to" repairs or alternations, or "subject to" an inspection
      by a qualiﬁed professional. Uniform Appraisal Dataset (UAD) 3.6 Policy Lenders
      using UAD 3.6 must follow the requirements in the UAD 3.6 Policy Supplement.
      Recent Related Announcements The table below provides references to recently
      issued Announcements that are related to this topic. Announcements Issue Date
      Announcement SEL-2025-04 June 04, 2025 Announcement SEL-2023-02 March 01, 2023'
  judgment: false
