FHA New Construction Documentation Requirements

FHA New Construction Documentation Requirements

New Construction < 1 Year

If property is one year old, provide Certificate of Occupancy to determine if less than 1 year.

Option A - New construction (one year old or less), where the local jurisdiction issues building permits AND performs local inspections/issues Occupancy Certificates (see * below)

Option B - New Construction (one year old or less), where the local jurisdiction does not issue a building permit AND a Certificate of Occupancy

• All of the following are required to satisfy the requirements for obtaining a high ratio loan >90%:
  • An Early Start Letter OR Proof of enrollment in a warranty plan acceptable to HUD. If an Early Start Letter is in the file, treat as proposed construction.
  • For Proposed Construction, the Initial, Framing and Final inspections by a Fee inspector unless a 10 Year Warranty is obtained.

*A letter from the local jurisdiction, explaining what their "equivalent" to a Building permit or Occupancy certificate, must be retained in the file along with a copy of the "equivalent"

The following construction documents also required:

• Builder's Certification of Plans, Specification, & Site Form HUD-92541
• Builder's Warranty Form HUD-92544
• 10-Yr Warranty Plan (when required). If using a 10 yr warranty
• Subterranean Termite Treatment Report NPCA 99a and NPCA 99b NOTE: 99b is not required if section 2 is completed on the 99a.
• Local Health Authority well water analysis or septic report, where applicable
• CIR for final inspection HUD-92051 (use if property is not 100% complete at the time of inspection.
• Form HUD-92541 - N/A for condo's

Re-Sales < 1 Year

HUD/FHA will treat re-sales to a second or subsequent purchaser of new, less than one year old properties that are 100% complete including all on and offsite improvements as existing properties and the new construction exhibits normally submitted will not be required, provided that:

• The re-sale is an Arms length transaction.
• The lender shall clearly identify the transaction is a re-sale to a second or subsequent purchaser in the case binder to avoid an NOR issued by the Homeownership Center for missing new construction exhibits.
• While a builder selling a newly built home is not subject to the property flipping rule, a subsequent seller would be.

Builder Foreclosures

 If the Builder was foreclosed on and the Seller is the foreclosing entity. The new construction documents are not required.