Condition ratings have always been a central part of appraisal reporting, but their role has expanded under UAD 3.6 and the redesigned Uniform Residential Appraisal Report (URAR).
Appraisers still use the familiar C1 to C6 scale, yet the process of assigning and supporting these ratings is more detailed and more transparent than before. The dynamic URAR brings structured fields, clearer expectations, and a stronger link between what you observe and how you report condition.
If you’re looking to refine your understanding of condition ratings or adjust to the updated UAD workflow, this overview will help you see how the pieces fit together in the new reporting environment.
How Condition Ratings Work in UAD 3.6
One of the biggest changes from the legacy forms is that condition is no longer captured with a single rating for the entire property. UAD 3.6 breaks condition into several components.
Appraisers now provide an exterior condition rating, an interior condition rating, room-level condition details for each kitchen and bathroom, and finally an overall condition rating in the Reconciliation section. The “overall” rating must reflect the information documented earlier in the report rather than serving as an isolated judgment.
Although the reporting structure is new, the underlying idea remains the same: Condition ratings describe the physical state of a property’s components at the time of the appraisal. These ratings still operate on an absolute scale. A C3 reflects a certain level of wear and maintenance regardless of whether the home is in a high-priced urban market or a small rural one. The rating is tied to observable condition, not to neighborhood norms or the home’s market segment.
Because the URAR now relies heavily on structured data, the condition rating must line up with the interior and exterior details you’ve already reported. Wear, deterioration, inoperative systems, and noticeable damage must be reflected in the condition rating.
The new format makes inconsistencies easier for lenders, reviewers, and automated tools to detect.
Understanding Each Property Condition Rating (C1–C6)
C1: New or like-new with no wear or repairs needed
A home rated C1 is entirely new or very close to new. Its components show no physical wear, and all major and minor elements are in like-new condition. Rebuilt homes may qualify if they sit on a completely new foundation and the reused materials have been fully remanufactured.
C2: Minimal wear and no significant deferred maintenance
A C2 reflects a property that has been extensively renovated to resemble new construction. Most components have been recently replaced or refinished. There is minimal physical depreciation, no deferred maintenance, and nothing requires repair.
C3: Normal wear and tear and all components functional
A home rated C3 shows normal wear associated with age but is generally well maintained. Some elements may be updated or replaced, though the property has not undergone a full renovation. Short-lived items may be entering their first replacement cycle.
C4: Livable but shows deferred maintenance
A C4 indicates modest wear and minor deferred maintenance, yet the property remains fully functional. Repairs needed at this level are typically cosmetic or limited in scope. Systems and components may be approaching the end of their life but continue to perform adequately.
C5: Major repairs needed; condition impacts livability
A C5 involves noticeable deferred maintenance and significant repair needs. Many components may be worn, outdated, or failing. Although the property is still livable, its overall utility is diminished and substantial work is necessary to bring it to typical market expectations.
C6: Severely damaged or uninhabitable
A C6 reflects major damage or serious deferred maintenance. Issues at this level may affect structural integrity or safety. Most major components are in poor condition or failing. Under UAD guidelines, if any part of a dwelling warrants a C6, the entire dwelling must be rated C6.
Condition Ratings and GSE Eligibility
Condition ratings also shape eligibility for sale to Fannie Mae and Freddie Mac. A property rated C6 cannot be delivered to Fannie Mae until the appraisal is completed “subject to” repairs that bring it above the C6 level. Freddie Mac has stricter criteria: properties rated C5 or C6 are not eligible for delivery and must be repaired to at least C4 before the loan can be delivered.
Under UAD 3.6, the appraiser also reports the “As Is” overall condition rating and, when necessary, the “Condition Subject to Repair” rating. These must be supported by the specific defects and repair estimates documented in the body of the URAR.
How Updating Is Reported in UAD 3.6
The previous “not updated,” “updated,” and “remodeled” categories are no longer part of UAD reporting. Instead, the URAR captures updating within the required Kitchen and Bathroom Details.
For each kitchen and bathroom, the appraiser reports the update status, the time frame in which updates occurred, the room’s condition status, and brief comments describing the work. This approach provides better clarity and consistency without relying on broad categories.
The Role of Defects, Damages, and Deficiencies
Condition ratings in UAD 3.6 work hand-in-hand with the expanded reporting requirements for defects, damages, and deficiencies. Appraisers now document these issues in structured tables throughout the report.
For each defect, the appraiser describes the feature and location, explains the issue, indicates whether safety or structural integrity is affected, recommends an action such as repair or inspection, and provides an estimated cost to cure.
These details directly support the component-level condition ratings as well as the overall rating reached in the Reconciliation section.
Where Condition Appears in the New URAR
Condition now appears in several areas, starting with the exterior condition rating and the interior condition rating. Each kitchen and bathroom includes its own condition status as part of the room-level details. Defects and repair needs show up in designated tables across the report.
Finally, the appraiser arrives at an overall condition rating in the Reconciliation section, which must reflect everything previously documented.
When Does UAD 3.6 Become a Requirement?
UAD 3.6 has been available for use since entering Broad Production on January 26, 2026, giving lenders the option to adopt it early. The official cutoff date is November 2, 2026, after which all appraisals for mortgages delivered to Fannie Mae or Freddie Mac must use UAD 3.6. During this transition window, both the older UAD 2.6 and the newer UAD 3.6 formats are accepted. Always confirm assignment requirements with your client to ensure compliance.
Final Thoughts
UAD 3.6 brings more structure and clarity to how appraisers report the physical condition of a property. Rather than relying on a single condition rating, the new dynamic URAR captures condition at multiple levels to create a more complete picture.
By aligning each rating with the details you’ve observed and documented, you produce a report that is more consistent, more defensible, and easier for clients and reviewers to interpret.
For detailed definitions and examples, review Appendix 2 and the URAR Reference Guide (Appendix F-1), which outlines the full condition rating criteria in UAD 3.6.
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