FHA can finance new construction—the documentation path just changes.
New construction is not an FHA exclusion. FHA categorizes construction status and requires the applicable builder, appraisal, inspection, warranty and property documentation.
Construction status matters
FHA distinguishes proposed construction, under-construction properties, and properties that have been completed for less than one year. The required documentation depends on the construction stage and the applicable Handbook pathway.
Minimum Property Standards
New construction is evaluated against FHA's Minimum Property Standards rather than simply the existing-property MPR framework. Local code compliance does not necessarily replace all FHA documentation requirements.
Inspections and documentation
Depending on the construction scenario, FHA may require plans/specifications, builder certifications, inspections, warranties, well/septic documentation or other new-construction evidence. The exact path should be determined before appraisal/closing rather than at the last minute.
Flipping rule
FHA Connection's current 2026 guidance notes that the normal property-flipping rule does not apply to a new-construction home that was never occupied.
Official FHA sources
Primary policy baseline: HUD/FHA Single Family Housing Policy Handbook 4000.1, current update published August 12, 2026. Property, appraisal and program rules can change through Handbook updates, Mortgagee Letters and FHA INFO.
Handbook 4000.1 · Handbook supplemental references · FHA Condominiums