Short answer
They're Fannie Mae's standard condition ratings for the home as a whole, from C1 (brand new, never lived in) to C6 (damage or deferred maintenance serious enough to affect safety, soundness or structure). Homes rated C1 through C5 can be appraised "as is" for a Fannie Mae loan. A C6 home must be appraised subject to repairs that bring it to at least C5 before the loan can close.
What does each rating mean?
- C1: newly built and never occupied, with no physical depreciation.
- C2: almost new or completely renovated, with no deferred maintenance and no repairs needed.
- C3: well maintained, with limited wear; some major components may be updated.
- C4: some minor deferred maintenance and normal wear; needs only minimal and cosmetic repairs, and major components still work adequately.
- C5: obvious deferred maintenance and some significant repairs needed, but the home is still usable as a residence.
- C6: substantial damage or deferred maintenance that affects safety, soundness or structural integrity.
Fannie Mae's Selling Guide (B4-1.3-06) says the rating reflects the whole property on its own merits, not one or two rooms and not how it compares with the neighbors.
What does an "as is" appraisal allow?
Fannie Mae allows an appraisal "as is" when the conditions are minor and don't affect safety, soundness or structure, and the value reflects them. Its examples of minor items include worn floors or carpet, minor plumbing leaks, holes in screens, missing handrails and cracked window glass. Those still get reported, but they usually aren't required repairs.
What happens with a C6 rating?
A C6 rating means at least one deficiency affects safety, soundness or structure, so the appraisal must be completed subject to repairing it, with the home reaching at least C5. That usually means the seller makes repairs before closing, or you look at a renovation loan. See renovation loans and buying a bank-owned home.
What about dampness, settlement or pests?
If the appraisal shows evidence of wood-boring insects, dampness or abnormal settlement, Fannie Mae has the appraiser comment on the effect on value, and the lender needs proof it was fixed or a professional report saying it doesn't threaten the structure. If you notice a damp basement, raise it during your inspection. See termite and pest inspections and, for FHA loans, FHA appraisal repairs.
Sources
Checked November 2, 2026. Rules and dates change, so confirm current details before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.