--- title: "HUD Capital Needs Assessment: MAP, RAD and USDA Guide | Calibre" description: "What a Capital Needs Assessment is, who requires one (HUD MAP, RAD, USDA Rural Development), and how the 20-year plan and repair rules work." url: https://calibre.multisites.ai/guides/hud-capital-needs-assessment-map-rad-usda publisher: Calibre Commercial Inspections phone: "+1-208-305-6245" email: Schedule@CalibreCBI.com --- Guide # Capital Needs Assessments for HUD, RAD and USDA properties Reviewed October 13, 2026 / 7 min read The short answer A Capital Needs Assessment (CNA) is an independent study of a multifamily property's physical condition and its capital needs over 20 years. HUD requires it, in HUD's CNA e-Tool, for many FHA loans and for RAD. USDA Rural Development requires its own CNA. The CNA sets immediate repairs and the replacement reserve. A Capital Needs Assessment is a physical study with a financial output. A third-party assessor inspects the property, finds what needs repair now, and projects what must be replaced over the next 20 years. The result sets two numbers lenders and agencies care about: the repairs to do first, and the money to set aside for replacements. If your multifamily property is financed or regulated by HUD, or by USDA Rural Development, you probably need a CNA. A standard Property Condition Assessment will not meet the agency’s rules. ## CNA vs PCA Property Condition Assessment (ASTM E2018) Capital Needs Assessment (agency) Who sets the rules ASTM standard, plus any lender form The agency: HUD, or USDA Rural Development Time horizon Set by scope and lender 20 years for HUD and USDA Output format Property Condition Report HUD: narrative plus CNA e-Tool data. USDA: narrative plus Excel schedules Sampling Representative observations tied to professional judgment Agency-set unit sampling Reserve Lender sets the method Calculated in the agency’s format See [Calibre’s multifamily inspection article](https://calibre.multisites.ai/cre-inspector-insights/multifamily-property-inspections-guide), which shows how the same building can need four different deliverables. See also [PCA vs Phase I vs commercial building inspection](https://calibre.multisites.ai/guides/pca-vs-phase-1-esa-vs-commercial-building-inspection). ## HUD and FHA: the MAP Guide HUD’s Multifamily Accelerated Processing (MAP) Guide is HUD’s guide for lenders on FHA multifamily insurance. HUD’s CNA e-Tool automates and standardizes the start, preparation, submission, review and approval of a CNA. HUD’s page says version 3.2 is cloud-based and supports 25 programs. **When a CNA is required.** HUD’s MAP Guide lists the CNA as required for FHA applications under Sections 220, 221(d)(4), 223(a)(7), 223(f), 231 and 241(a). It also applies to RAD (see below). Exemptions exist in the Guide. Read the rules for your program. **What the CNA contains.** HUD’s Guide describes the CNA as an evaluation of the property’s physical condition, capital repair needs and estimated replacement costs over 20 years (Appendix 5, Section A.5.7.1). The CNA e-Tool lists immediate repairs and estimates the initial and annual deposits to the Reserve for Replacement. **Who prepares it.** The Needs Assessor must have education, professional credentials and field experience appropriate to the property. The Guide edition read says the qualifications must not be less than ASTM E2018-15 describes. The Needs Assessor must know local building standards and codes, and the rules for multifamily housing such as the Fair Housing Act Accessibility Guidelines, the Uniform Federal Accessibility Standards, and the 2010 ADA Standards. The Needs Assessor cannot have an identity of interest with the lender or the borrower or any relationship that creates a conflict of interest. (Section 5.2.2.1) **Inspection.** For an existing property, the Needs Assessor makes on-site inspections, including a representative sample of units (Section 5.2.2.2 and Appendix 5, A.5.7.2.D). The Guide sets sampling rules. Read them for your property type. **Timing.** The CNA must be completed not earlier than 180 days before the Firm Commitment application (Section 5.10.3.A). A prior CNA may be accepted if dated not more than three years before the application, with other conditions (Section 5.10.3.B). **Immediate repairs.** Critical life safety repairs must be done before endorsement. Critical accessibility repairs must be done as soon as possible, although they may be deferred after endorsement if earlier completion is not possible. Non-critical repairs may be deferred past endorsement and must be done within 12 months after endorsement. The Regional Center or Satellite Office Director may approve an extension of up to six more months. (Sections 3.7.5.A and 5.10.7) **Reserve for Replacement.** HUD requires a Reserve for Replacement escrow for all insured mortgages. An initial deposit is made at endorsement, and monthly deposits follow a financial schedule built in the CNA e-Tool and approved by HUD. (Section 3.1.28 and Appendix 5, Section A.5.7) ## RAD: Rental Assistance Demonstration RAD converts public housing and some other assisted housing to long-term contracts. The RAD Notice, H-2019-09 / PIH-2019-23 (Rev-4), sets the CNA rules. - Each project selected for an award must have a detailed physical inspection that finds short-term rehabilitation needs, to be done as part of the RAD conversion, and long-term capital needs, to be met through a Reserve for Replacement account. - A CNA must be submitted with the Financing Plan. It must have been completed no earlier than 180 days before submission, unless HUD approves otherwise. - A qualified, independent third-party professional completes the CNA as the MAP Guide requires. - The CNA e-Tool is required as part of any RAD Financing Plan or FHA Firm Commitment application, with exceptions. The e-Tool has a narrative and a financial model. The model holds the 20-year schedule and sets the initial deposit and the annual deposit to the replacement reserve. - The Notice defines “Critical repairs” as life safety repairs and accessibility repairs. - HUD may exempt some transaction types from all or part of the CNA. Examples in the Notice include certain non-FHA transactions with an annual reserve deposit of at least $450 per unit and certain 9% or 4% LIHTC situations. The exemption must be confirmed with HUD before the Financing Plan is submitted. ## USDA Rural Development Rural Development (RD) requires a CNA for properties in its Multi-Family Housing programs. RD publishes an addendum describing the CNA process. The copy read is undated and cites the “ASTM 2018-08 Outline,” so confirm it is current. Key points: - **Purpose and horizon.** A CNA gives a repair schedule for the property in its present condition and shows repairs and replacements needed over a 20-year span. - **Independence.** The CNA must come from an independent third party with no identity of interest with the owner, the management agent, the applicant or transferee, or other related parties defined in 7 CFR 3560.11. - **Sampling.** At least 50% of dwelling units (50% if the property has fewer than 50 units), 45% for properties of 50 to 99 units, or 40% for properties of 100 or more units must be inspected non-intrusively. All site improvements, common facilities and building exteriors must be inspected. RD says ASTM’s “representative observations” are not adequate for these areas. - **Currency.** A CNA more than a year old at RD review must be updated before approval. A CNA between one and two years old at underwriting must be updated before the transaction is approved. If the site visit was more than two years ago, a new site visit is required. - **Report parts.** The report must include a project summary, narrative, materials and conditions, capital needs (immediate needs and needs over the term, in Excel), an executive summary with totals and per-unit costs using a 3% inflation rate, and appendices with at least 25 color photographs and location maps. ## What a CNA deliverable looks like Calibre’s CNA page describes its deliverables: a narrative report, the HUD CNA e-Tool data file if needed, and photographic documentation. Its scope covers envelope, structure, mechanical, electrical, plumbing, life safety, and site work, with samples of units, common areas and exteriors. It builds a 20-year projection with year-by-year line items. It includes Immediate Repair Items and replacement reserve calculations. It screens for lead-based paint, asbestos-containing materials, and accessibility items alongside the physical findings. See [Calibre’s CNA service](https://calibre.multisites.ai/cre-services/capital-needs-assessment). ## How a CNA engagement runs Calibre’s CNA page describes its process in four steps. 1. **Scope alignment call.** The team confirms the property profile, the financing program, the agency rules that apply, and the timeline. 2. **Document review.** The team reads prior CNAs, capital plans, records of recent capital projects, leases, and HUD form documentation. 3. **On-site inspection.** The assessor inspects a sample of unit interiors, common areas, exteriors, and site features under the agency’s sampling rules. 4. **Delivery.** The deliverable is the narrative CNA, the e-Tool data file, and photographs. A debrief call follows for the lender or sponsor team. The order matters. A scope call first prevents the most common error, which is a report built for the wrong program. ## Questions to ask a CNA provider - Which program and which edition of the agency’s rules is this CNA built for? - Has the provider delivered CNAs in the CNA e-Tool, and will the data file load without rework? - How will the unit sample be chosen, and does it meet the agency’s rule for my property size? - Who will do the inspection, and do they meet the agency’s qualification and independence rules? - How are critical repairs separated from non-critical ones? - What dates will be on the report: the site visit date, the report date, and the e-Tool submission date? ## How to prepare Calibre’s page lists the documents a CNA engagement starts with: - Prior CNAs and capital plans - Records of recent capital projects - Leases - HUD form documentation Add the unit mix, building drawings, warranty records, and service contracts if you have them. Tell the assessor which program and which deadline apply. Give access to a fair mix of unit types and conditions. Tell the manager so residents get notice. ## Common problems - **A stale CNA.** HUD’s 180-day and three-year rules and RD’s one- and two-year rules cut off older reports. Check the date of the site visit, not only the report date. - **A conflicted assessor.** Both HUD and RD require independence. Ask the assessor to confirm in writing that there is no identity of interest. - **Wrong format.** A narrative that does not fit the CNA e-Tool format may be sent back. - **Immediate repairs that surprise the closing.** Repairs flow into the closing escrow. Ask early which items are critical. - **Using one report for two programs.** An ASTM PCA done for a conventional lender will not satisfy HUD or RD. [Request a proposal](https://calibre.multisites.ai/request-proposal) for a CNA scoped to your financing program. ## Frequently asked questions What is a Capital Needs Assessment? It is an independent study of a multifamily property's physical condition and capital needs. For HUD, it evaluates physical condition, capital repair needs and estimated replacement costs over 20 years, and it sets immediate repairs and the replacement reserve. Which HUD programs require a CNA? The MAP Guide edition read lists Sections 220, 221(d)(4), 223(a)(7), 223(f), 231 and 241(a), plus RAD. Check the current MAP Guide and your Regional Center for your program. What is the CNA e-Tool? It is HUD's cloud-based system for preparing, submitting, reviewing and approving a CNA. HUD says version 3.2 supports 25 programs across its asset development, asset management and asset recapitalization offices. How old can a HUD CNA be? The MAP Guide edition read says the CNA must be completed not earlier than 180 days before the Firm Commitment application. A previously completed CNA may be accepted if dated not more than three years before the application, with conditions. What does RAD require? The RAD Notice, H-2019-09 / PIH-2019-23 (Rev-4), requires a CNA with the Financing Plan, completed no earlier than 180 days before submission unless HUD approves. It requires the CNA e-Tool, with exceptions, and an independent third-party assessor. Does USDA Rural Development require a CNA? Yes, for properties in its Multi-Family Housing programs. RD's addendum describes a 20-year schedule, an independent provider, minimum unit sampling by property size, and update rules by age of the CNA. How is a CNA different from a Property Condition Assessment? A PCA follows ASTM E2018, with scope set by the user and lender. A CNA follows the agency's rules, including its sampling, its 20-year schedule, and its data format. A PCA will not meet HUD or USDA CNA rules. What happens to the immediate repairs in a HUD CNA? Under the MAP Guide edition read, critical life safety repairs must be done before endorsement. Non-critical repairs may be deferred and must be done within 12 months after endorsement, with a possible six-month extension. ## Sources - [HUD MAP Guide (4430.G)](https://www.hud.gov/sites/dfiles/OCHCO/documents/4430GHSGG.pdf) - [HUD, Capital Needs Assessment Tool](https://www.hud.gov/hud-partners/multifamily-cna) - [HUD, RAD Notice H-2019-09 / PIH-2019-23 (Rev-4)](https://www.hud.gov/sites/dfiles/Housing/documents/H-2019-09-PIH-2019-23_RAD_Notice%20Rev4_20190905.pdf) - [HUD, RAD statutes, notices, regulations and tools](https://www.hud.gov/hud-partners/rad-notices) - [USDA Rural Development, Addendum: Capital Needs Assessment Process](https://www.rd.usda.gov/sites/default/files/cna_addendum.pdf) - [USDA Rural Development handbooks (for the current 3560 handbook)](https://www.rd.usda.gov/resources/directives/handbooks) - [ASTM E2018-24](https://store.astm.org/e2018-24.html) Lender guides and standards change. Confirm current requirements with your lender and counsel. This guide is general information, not legal advice. ## Ready for your next inspection? Tell us about the property and your timeline. We will scope the right report and send a proposal. [Request a proposal](https://calibre.multisites.ai/request-proposal) [(208) 305-6245](tel:+12083056245)