Does HUD Still Approve Contractors? 

Posted 9/10/2025

It is important to clarify that HUD no longer approves home builders. They never approved contractors. This process was discontinued in 1995. Instead, HUD amended the Builder Certification process to require builders to certify their compliance with HUD Guidelines, including Affirmative Fair Housing Marketing Plans.

Lenders are still required to acquire and retain essential documentation such as construction plans, specifications, and builder warranties. However, the lender—also referred to as the mortgagee—is not responsible for reviewing or formally approving these documents. Their role is limited to collecting and maintaining the certified plans and related materials provided by the builder.

This change ensures that builders remain accountable for their compliance with HUD requirements, but it shifts the oversight responsibility away from HUD and places emphasis on certification and documentation retention. For more details on Affirmative Fair Housing Marketing Plans, refer to Mortgagee Letter 2001-09. The official discontinuation of HUD builder approval is documented in Mortgagee Letter 1995-57.

In summary, while HUD does not approve builders, it maintains high standards through the certification process and documentation requirements, supporting transparency and fair housing practices in new construction financed with FHA loans.