| Condition Rating | Definition | Loan Type |
|---|---|---|
| C1 | New construction | Ground Up Construction |
| C2 | No deferred maintenance | DSCR Loan |
| C3 | Limited deferred maintenance | DSCR Loan |
| C4 | Minor deferred maintenance | DSCR Loan |
| C5 | Significant deferred maintenance | Bridge Loan |
| C6 | Severe deferred maintenance | Bridge Loan |
The Single Family Uniform Appraisal Dataset (UAD) from Fannie Mae establishes a standardized property condition rating guidelines from which appraisers determine the condition of a subject property. If you’re a real estate investor, understanding a property’s condition rating will help avoid the common situation where you want a DSCR loan (rental loan) but the condition of the property does not qualify based on your lender’s guidelines. Instead you need to use a bridge loan to purchase and rehab the property and then refinance into a DSCR rental loan.
C1 Condition Rating: New Construction
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 Condition Rating: No Deferred Maintenance
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 All outdated components and finishes have been updated and/or replaced with components that meet current standards.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.
C3 Condition Rating: Limited Deferred Maintenance
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 Condition Rating: Minor Deferred Maintenance
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 Condition Rating: Significant Deferred Maintenance
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 Condition Rating: Severe Deferred Maintenance
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.
Source: Fannie Mae Single Family Uniform Appraisal Dataset
