Appraisal Property Condition Ratings (C1–C6) for DSCR Loans

[Robin Simon]

Seems like the other post on potential eligibility condo rules was pretty popular so going to go ahead and share this one as well giving an overview of the C1-C6 Ratings for Property Condition in Appraisals

Rating	Definition	Criteria/Examples	DSCR Loan Eligible?
C1	Brand-new construction, never lived in. The property has been recently constructed and has never been occupied. All components are new, with no physical wear.	Has a foundation that must be 100% original to the new construction. May include non-structural components composed of “like new” recycled materials (e.g., reconditioned or refinished barn wood). Is a 100% newly constructed dwelling that does not exhibit physical depreciation.	✅ Yes
C2	Fully renovated inside and out recently. Like-new condition with all major components are new or recently updated. Considered same as “C1” condition, only difference is recently renovated versus brand new.	Has been recently constructed (within the past 36 months), and otherwise exhibits virtually no wear and tear, but is no longer new due to occupancy or use (e.g., model home). Has been fully remodeled "to the studs" including new major components; a new dwelling built utilizing the footprint or façade of a pre-existing dwelling; or a newly converted condo/co-op in a preexisting building.	✅ Yes
C3	Property that has been well-maintained with minimal “wear and tear.” Renovations may have occurred within previous few years (generally completed less than five years prior) and/or limited in scope vs. “down to the studs.” Minor physical depreciation from normal use.	Components or rooms that are older but have been very well maintained or experienced minimal use, and show little or no physical depreciation. Major components or rooms that have been recently updated, but which do not constitute a full-home renovation/remodel. Examples of recent upgrades may include a newer roof or mechanical systems, new or refurbished floors in some areas and remodeled kitchens or bathrooms.	✅ Yes
C4	Property has been adequately maintained and exhibits moderate wear and tear resulting from occupancy and exposure to elements. May feature some updating but otherwise contains deferred maintenance items that are generally minor or cosmetic in nature. Less than $2,000 in Deferred Maintenance (required repairs) but still livable.	Property may have experienced some periodic updating but most components are near the middle of their life cycle. Common deferred maintenance resulting from typical use is apparent but presents no immediate impact. Example of properties in this condition may include minor damage to walls or trim (interior or exterior), worn floor finishes or carpet that shows age and a kitchen and/or bathrooms that are dated but fully functional.	✅ Yes
C5	The property has significant wear and tear from inadequate maintenance. Some components of the property are missing or near the end of useful life, however structural integrity and soundness is intact making occupancy possible, but not ideal.	Property has items that will need to be repaired, rehabilitated, or replaced in the near future for the dwelling to remain usable and functional. Examples that would trigger this rating include roofing that is significantly worn, cupped, or curled but with no apparent active leaks, severely worn, damaged, or missing floor coverings. And a kitchen or bathroom that may be functional but in disrepair (e.g., damaged or missing cabinets or countertops).	❌ No
C6	The property is in severe disrepair, often uninhabitable or unsafe. Major components are missing or broken. Property is not suitable for occupancy.	These properties are not usable in their current state and require immediate repairs, rehabilitation, or replacement of key components. Examples include no working kitchen or bathrooms, exposed studs or no utilities, active roof leaks, damaged or missing exterior components that allow weather intrusion into the dwelling with resultant structural impact or damage, and a damaged or failing foundation.	❌ No