source:
  type: guide
  id: hud-4000-1-ii-i-new-construction
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — i. New Construction
    (06/27/2025)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — i. New
    Construction (06/27/2025).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-i-new-construction-full
  canonical_id: hud-4000-1-ii-i-new-construction-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — i. New Construction
    (06/27/2025)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — i. New
      Construction (06/27/2025)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'i. New Construction (06/27/2025) i. Definitions [Updates to
      this section must be implemented for case numbers assigned on or after January
      4, 2021] New Construction refers to Proposed Construction, Properties Under
      Construction, and Properties Existing Less than One Year as defined below: •
      Proposed Construction refers to a Property where no concrete or permanent material
      has been placed. Digging of footing is not considered permanent. • Under Construction
      refers to the period from the first placement of permanent material to 100 percent
      completion with no Certificate of Occupancy (CO) or equivalent. • Existing Less
      than One Year refers to a Property that is 100 percent complete and has been
      completed less than one year from the date of the issuance of the CO or equivalent.
      The Property must have never been occupied. FHA treats the sale of an occupied
      Property that has been completed less than one year from the issuance of the
      CO or equivalent as an existing Property. ii. Eligible Property Types [Updates
      to this section must be implemented for case numbers assigned on or after January
      4, 2021] The following property types are eligible for New Construction financing:
      • Site Built Housing (one- unit, one-unit with an Accessory Dwelling Unit (ADU),
      or two- to four-units) • Condominium units in Approved Projects or Legal Phases
      • Manufactured Housing (one-unit or one-unit with an ADU) iii. Required Inspections
      for New Construction Financing [Updates to this section must be implemented
      for case numbers assigned on or after January 4, 2021] (A) Site Built Housing
      (By Construction Status at Time of Appraisal) The Mortgagee must obtain: (1)
      Proposed Construction • copies of the building permit (or equivalent) and CO
      (or equivalent); or • three inspections (footing, framing and final) performed
      by the local authority with jurisdiction over the Property or an ICC certified
      RCI or CI (for Modular Housing, footing and final only); or • in the absence
      of such ICC certified RCI or CI, the Mortgagee may obtain three inspections
      (footing, framing and final) performed by a disinterested third party, who is
      a registered architect, a structural engineer, or a qualified trades person
      or contractor, and has met the licensing and bonding requirements of the state
      in which the Property is located. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      A. Title II Insured Housing Programs Forward Mortgages 8. Programs and Products
      - New Construction (06/27/2025) Handbook 4000.1 472 Last Revised: 11/26/2025
      (2) Under Construction • copies of the building permit (or equivalent) and CO
      (or equivalent); or • a final inspection issued by the local authority with
      jurisdiction over the Property or by an ICC certified RCI or CI; or • in the
      absence of such ICC certified RCI or CI, the Mortgagee may obtain a final inspection
      performed by a disinterested third party, who is a registered architect, a structural
      engineer, or a qualified trades person or contractor, and has met the licensing
      and bonding requirements of the state in which the Property is located. (3)
      Existing Less than One Year • a copy of the CO (or equivalent); or • a final
      inspection issued by the local authority with jurisdiction over the Property
      or by an ICC certified RCI or CI; or • in the absence of such ICC certified
      RCI or CI, the Mortgagee may obtain a final inspection performed by a disinterested
      third party, who is a registered architect, a structural engineer, or a qualified
      trades person or contractor, and has met the licensing and bonding requirements
      of the state in which the Property is located. (B) Manufactured Housing (By
      Construction Status at Time of Appraisal) Inspection Requirements The Mortgagee
      must obtain: (1) Proposed Construction • copies of the building permit, (or
      equivalent) and CO (or equivalent); or • two inspections (initial and final)
      performed by the local authority with jurisdiction over the Property or an ICC
      certified RCI or CI; or • in the absence of a local authority with building
      code jurisdiction or ICC certified RCI or CI, the Mortgagee may obtain two inspections
      (initial and final) performed by a disinterested third party, who is a registered
      architect, a structural engineer, or a qualified trades person or contractor,
      and has met the licensing and bonding requirements of the state in which the
      Property is located. (2) Under Construction • copies of the building permit,
      (or equivalent) and CO (or equivalent); or • a final inspection performed by
      the local authority with jurisdiction over the Property or an ICC certified
      RCI or CI; or • in the absence of a local authority with building code jurisdiction
      or ICC certified RCI or CI, the Mortgagee may obtain a final inspection II.
      ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs
      Forward Mortgages 8. Programs and Products - New Construction (06/27/2025) Handbook
      4000.1 473 Last Revised: 11/26/2025 performed by a disinterested third party,
      who is a registered architect, a structural engineer, or a qualified trades
      person or contractor, and has met the licensing and bonding requirements of
      the state in which the Property is located. (3) Existing Less than One Year
      • a copy of the CO (or equivalent); or • a final inspection performed by the
      local authority with jurisdiction over the Property or an ICC certified RCI
      or CI; or • in the absence of a local authority with building code jurisdiction
      or ICC certified RCI or CI, the Mortgagee may obtain a final inspection performed
      by a disinterested third party, who is a registered architect, a structural
      engineer, or a qualified trades person or contractor, and has met the licensing
      and bonding requirements of the state in which the Property is located. (C)
      Units in Condominium Project or Legal Phase (Existing Less Than One Year) The
      Mortgagee must obtain a CO or its equivalent. iv. Required Documentation for
      New Construction Financing [Updates to this section must be implemented for
      case numbers assigned on or after January 4, 2021] The Mortgagee must obtain
      and include the following documents in the case binder: • form HUD-92541, Builder’s
      Certification of Plans, Specifications, and Site; • form HUD-92544, Warranty
      of Completion of Construction; • required inspections, as applicable: • inspections
      performed by an ICC certified RCI or CI or a third-party, who is a registered
      architect, a structural engineer, or a qualified tradesperson or contractor
      must be reported on form HUD-92051, Compliance Inspection Report, or on an appropriate
      state-sanctioned inspection form; and • when a third party, who is a registered
      architect, a structural engineer, or a qualified tradesperson or contractor,
      is relied upon for required inspections due to the absence of an ICC certified
      RCI or CI, a certification from such inspector that they are licensed and bonded
      under applicable state and local laws to perform the type of inspection completed
      must be included; • Wood Infestation Report, unless the Property is located
      in a county listed as not required on HUD’s “Termite Treatment Exception Areas”
      list: o Form HUD-NPMA-99-A, Subterranean Termite Protection Builder’s Guarantee,
      is required for all New Construction. If the building is constructed with steel,
      masonry or concrete building components with only minor interior wood trim and
      roof sheathing, no treatment is needed. The Mortgagee must II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward Mortgages
      8. Programs and Products - New Construction (06/27/2025) Handbook 4000.1 474
      Last Revised: 11/26/2025 ensure that the builder notes on the form that the
      construction is masonry, steel, or concrete. o Form HUD-NPMA-99-B, New Construction
      Subterranean Termite Service Record, is required when the New Construction Property
      is treated with one of the following: Termite Bait System, Field Applied Wood
      Treatment, soil chemical termiticide, or Physical Barrier System is installed,
      as reflected on form HUD-NPMA-99-A. The Mortgagee must reject the use of post
      construction soil treatment when the termiticide is applied only around the
      perimeter of the foundation. • local health authority or qualified lab well
      water analysis; and • septic report, where required by the local jurisdictional
      authority. v. Documents to be Provided to Appraiser at Assignment The Mortgagee
      must provide the Appraiser with a fully executed form HUD-92541, signed and
      dated no more than 30 Days prior to the date the appraisal was ordered. For
      Properties 90 percent completed or less, the Mortgagee must provide a copy of
      the floor plan, plot plan, and any other exhibits necessary to allow the Appraiser
      to determine the size and level of finish of the house they are appraising.
      For Properties greater than 90 percent but less than 100 percent completed,
      the Mortgagee must provide the Appraiser with a list of components to be installed
      or completed after the date of inspection. vi. Property Considerations New Construction
      must meet HUD’s Minimum Property Requirements (MPR) and Minimum Property Standards
      (MPS). II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured
      Housing Programs Forward Mortgages 8. Programs and Products - New Construction
      (06/27/2025) Handbook 4000.1 475 Last Revised: 11/26/2025 vii. Mortgagee Review
      of Appraisal (A) Site Considerations (1) Environmental The Mortgagee must require
      corrective work to mitigate any condition that arises during construction that
      may affect the health and safety of the occupants, the Property’s ability to
      serve as collateral, or the structural soundness of the improvements. (2) Operating
      Oil or Gas Wells If a New Construction dwelling is located within 75 feet of
      an operating oil or gas well, the Mortgagee must reject the Property unless
      mitigation measures are completed. (3) Slush Pits If a Property is Proposed
      Construction near an active or abandoned Slush Pit, the Appraiser must require
      a survey to locate the pit. The Mortgagee is to assess any impact on the subject
      Property. (4) Special Airport Hazards If a New Construction Property is located
      within Runway Clear Zones (also known as Runway Protection Zones) at civil airports
      or within Clear Zones at military airfields, the Mortgagee must reject the Property
      for insurance. Properties located in Accident Potential Zone 1 (APZ 1) at military
      airfields may be eligible for FHA mortgage insurance provided that the Mortgagee
      determines that the Property complies with Department of Defense guidelines.
      (5) Flood Hazard Areas If any portion of the dwelling and related Structures
      or equipment essential to the Property Value is located in a Special Flood Hazard
      Area (SFHA), the Mortgagee must reject the Property, unless the Mortgagee: •
      obtains a Federal Emergency Management Agency (FEMA)-issued final Letter of
      Map Amendment (LOMA) or final Letter of Map Revision (LOMR) that removes the
      Property from the SFHA; or • obtains a FEMA National Flood Insurance Program
      (NFIP) Elevation Certificate (FEMA Form FF-206-FY-22-152) that documents that
      the lowest floor of the residential building, including the basement, and all
      related Structures or equipment essential to the Property Value are built above
      the 100-year flood elevation in compliance with the NFIP criteria; and II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward
      Mortgages 8. Programs and Products - New Construction (06/27/2025) Handbook
      4000.1 476 Last Revised: 11/26/2025 • ensures that the Elevation Certificate
      is completed based on finished construction. The Mortgagee must include the
      LOMA, LOMR, or FEMA NFIP Elevation Certificate (FEMA Form FF-206-FY-22-152)
      with the case when it is submitted for endorsement. The Mortgagee must ensure
      that Flood Insurance is obtained when a FEMA NFIP Elevation Certificate (FEMA
      Form FF-206-FY-22-152) documents that the Property remains located within an
      SFHA. (6) Individual Water Supply Systems (Wells) The Mortgagee must ensure
      that new wells are drilled and are no less than 20 feet deep and cased. Casing
      should be steel or other casing material that is durable, leak-proof, and acceptable
      to either the local health authority or the trade or profession licensed to
      drill and repair wells in the local jurisdiction. A well located within the
      foundation walls of New Construction is not acceptable except in arctic or subarctic
      regions. (a) Requirements for Well Water Testing A well water test is required
      for all newly constructed Properties. All testing must be performed by a disinterested
      third party. This includes the collection and transport of the water sample
      collected at the water supply source. The sample must be collected and tested
      by the local health authority, a commercial testing laboratory, a licensed sanitary
      engineer, or other party that is acceptable to the local health authority. At
      no time will the Borrower/owner or other Interested Party collect and/or transport
      the sample. The following tables provide the minimum distance required between
      wells and sources of pollution: Water Well Location Minimum Property Standards
      for New Construction 24 CFR § 200.926d(f)(3)(iv)* 1 Property line/10 feet 2
      Septic tank/50 feet 3 Absorption field/100 feet 4 Seepage pit or cesspool/100
      feet 5 Sewer lines with permanent water tight joints/10 feet 6 Other sewer lines/50
      feet 7 Chemically poisoned soil/25 feet (reduced to 15 feet where ground surface
      is protected by impervious strata of clay, hardpan or rock) 8 Dry well/50 feet
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing
      Programs Forward Mortgages 8. Programs and Products - New Construction (06/27/2025)
      Handbook 4000.1 477 Last Revised: 11/26/2025 Water Well Location Minimum Property
      Standards for New Construction 24 CFR § 200.926d(f)(3)(iv)* 9 Other – refer
      to local health authority minimums * distance requirements of local authority
      prevail if greater than stated above The following provides the minimum standards
      for Individual Water Supply Systems (wells): Individual Water System Minimum
      Property Standards for New Construction 24 CFR § 200.926d(f)(1) and (2) 1 Lead-free
      piping 2 If no local chemical and bacteriological water standards, state standards
      apply 3 Connection of public water whenever feasible 4 Wells must deliver water
      flow of five gallons per minute over at least a four-hour period (b) Required
      Documentation The Mortgagee must submit a valid water test from the local health
      authority or qualified lab. The report may not be more that 180 Days old from
      the Disbursement Date. (7) Shared Well A Shared Well is permitted if the requirements
      in Shared Wells are met. (B) Sales Comparison Approach: Comparable Selection
      For Properties in new subdivisions, the selected comparable sales must include
      at least one sale outside the subdivision or project and at least one sale from
      within the subdivision or project. viii. Completion of Construction Regardless
      of the inspection process used, the Mortgagee must certify on form HUD- 92800.5B,
      Conditional Commitment Direct Endorsement Statement of Appraised Value, that
      the Property is 100 percent complete and meets HUD’s MPR and MPS. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward
      Mortgages'
  judgment: false
