FHA condos that have been "approved" by the FHA are eligible for an FHA home loan or a reverse mortgage.
The FHA offers an easy-to-use condo lookup tool that displays FHA-approved condominiums.
If the condo development is not on the authorized list, or if the approval has expired, the project must be approved or re-certified before an FHA loan may be acquired, or the buyer may seek single-unit approval.
Single-unit approval (previously named spot-loan approval)
HUD officially launched the Single Unit Approval procedure on 10/15/2019.
Borrowers may now get FHA approval for single-family units in non-FHA-approved condominium developments.
To be qualified for Single-Unit Approval, the unit must be in a non-FHA-approved project that is complete and ready for occupancy, includes at least five dwelling units, and is not a prefabricated home.
The project must also satisfy a subset of the project approval criteria, such as FHA insurance concentration, owner-occupancy proportion, and financial condition.
Single-unit approval requirements:
- The condominium project is not presently "approved" or was previously denied for an adverse decision. The condo must have a minimum of 50% owner-occupied units; and for condominium projects with 10 or more units, no more than 10% of individual condo units may be FHA-insured.
- No more than two FHA-insured apartments may be included in projects with less than ten units.
- Commercial areas are restricted to a maximum of 35%.
- The condominium complex must have at least five units.
- Manufactured homes are not eligible, and condominium projects must satisfy all FHA Property Standards.
- A lender that uses Direct Endorsement Underwriters must manage the single-unit approval procedure.
- Realtors, Condominium Associations, and lenders that do not have DE Underwriters are not permitted to apply for an SUA directly. The Condominium Association must still satisfy ALL eligibility criteria for Full Project Approval.
The Condominium Association must complete the Condominium Questionnaire.
The single-unit approval requirements are very similar to the Full Project approval.
Frequently Asked Questions About FHA Condos
Q. How long does it take for FHA condo approval?
A. The time frame depends on whether the condo development is currently approved or if the development must be approved by way of the Single-unit approval program. In either case, the condo manager is required to complete the necessary paperwork.
Q. How to check if a condo is FHA approved?
A. Use the HUD lookup tool above.
Q. Why would a condo not be FHA approved?
A. The paper work is substantial and time consuming.
Q. Does a condo have to be FHA approved?
A. Condos must be FHA approved to obtain FHA financing. There's no way around this requirement.
Q. Is it hard to get a condo FHA approved?
A. The approval process is time consuming. The condo manager must complete the condo questionnaire, and the paperwork is passed to the lender's underwriter for review. After the i's are dotted and the t's are crossed, the whole package is sent to HUD/FHA.