On September 22, 2026, HUD announced proposed policy revisions to Handbook 4000.1, and posted these proposed revisions on its FHA Single Family Drafting Table (Drafting Table) for review and feedback. These proposed revisions represent the most substantial revisions to HUD’s appraisal and property standards in decades. If adopted, these revisions would have a significant effect on how FHA roster appraisers conduct and report their assignments.
Terminology Shift
The most foundational change would be the retirement of the terms Minimum Property Requirements (MPR) and Minimum Property Standards (MPS). These would be replaced with a single, unified framework called Property Acceptability Criteria. Appraisers would be responsible for verifying that properties meet these criteria, rather than the previous bifurcated MPR/MPS structure.
Condition and Quality Ratings
The proposal would formalize the use of UAD condition (C1–C6) and quality (Q1–Q6) ratings as the standard for all FHA appraisals. Critically, these ratings must reflect an absolute assessment of the property—not a relative comparison to other homes in the market area. Properties receiving a C5, C6, or Q6 rating would be ineligible as collateral unless all deficiencies are cured prior to closing. Any appraisal involving these ratings would be completed subject to the required repairs, reflecting the hypothetical condition that repairs have been completed.
Scope of Required Repairs
The proposal clarifies when appraisers must call for repairs. Conditions would be flagged only when they affect the property’s safety, security, soundness, marketability, or the health of its occupants. Cosmetic or minor deferred maintenance items do not require repair conditions but must still be noted in the report.
Removed Requirements
Several legacy requirements are proposed for deletion. The mandate to condition an appraisal for a professional roof inspection when the roof has less than two years of remaining life would be eliminated. The requirement to operate appliances would be eliminated. Specific standalone sections on methamphetamine-contaminated properties and certain prescriptive attic observation protocols would also be removed from the appraiser requirements. Also, lead-based paint requirements would apply to the dwelling only, and not to sheds, outbuildings, fences, or other structures.
New Reporting Obligations
Appraisers would gain some targeted new responsibilities under these proposed revisions. For properties near high-pressure gas or liquid petroleum pipelines, appraisers must assess and report on marketability impact and not just flag it as a hazard. Additionally, if the seller in a purchase transaction is not the owner of record, the appraiser must include an explanation in the report. Interestingly, the Handbook proposes to retain the term Gross Living Area (GLA), despite the removal of this term from the URAR and GSE guidance.
Bottom Line
These proposed changes would streamline the property acceptability framework, reduce some legacy prescriptive requirements, and place greater emphasis on standardized UAD ratings as the primary vehicle for communicating property condition. Appraisers should carefully review how they apply and document C5/C6 ratings, as these ratings would carry direct eligibility consequences.
Feedback Requested
As indicated previously, these are proposed revisions; they have not been adopted and there is no guarantee that they will be adopted. HUD has published them for the purpose of seeking feedback. The deadline for feedback is November 6, 2026. More information, including a Feedback Response Worksheet and instructions on providing feedback, can be found online at the FHA Single Family Drafting Table (Drafting Table).
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