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FHA does not insure a condo loan simply because the borrower qualifies — the project has to qualify too. There are two doors in: full project approval, and Single-Unit Approval for one unit at a time.
Step 1: look the project up
HUD publishes the authoritative list on its Condominiums search page at hud.gov. Search by project name, city, county, or state. The result tells you:
- Status — Approved, Withdrawn, Rejected, or Expired
- Approval and expiration dates — approvals run for three years and must be recertified
- The project's HUD ID and address
An "Approved" status with a future expiration date is what you need. Anything else means you look at Single-Unit Approval or a different loan type. Listing agents are frequently wrong about approval status, so always verify on HUD's site yourself. We will run the lookup with you on any address before you write an offer.
Step 2: what a project must satisfy
Full project approval is a lender- or HOA-submitted package reviewed against Handbook 4000.1 standards. The core tests:
- Owner-occupancy of at least 50% of units, with as low as 35% possible when the project meets stricter financial conditions
- FHA concentration — no more than 50% of the units in the project may carry FHA-insured mortgages
- HOA dues delinquency — no more than 15% of units may be 60 or more days past due on assessments
- Reserves — the budget must allocate at least 10% of income to reserves, supported by a reserve study when required
- Commercial space — generally limited to 35% of total floor area, with exceptions up to 49% (and to 55% by HUD approval)
- Single-investor ownership limits, adequate insurance, no ineligible legal structures (condo hotels, timeshares, houseboat projects), and no litigation that threatens the project's finances or safety
Step 3: Single-Unit Approval (SUA)
Mortgagee Letter 2019-01 reopened FHA financing in unapproved buildings. A single unit can be approved when:
- The project is complete, with at least two units, and is not a manufactured-home or otherwise ineligible project type
- FHA-insured units stay under the cap — 10% of total units in projects with 10 or more units, and a maximum of two units in projects with fewer than 10
- The project meets owner-occupancy, delinquency, insurance, and litigation standards
- The unit is for a principal residence (SUA is not available for investment purchases)
The lender submits the SUA case through FHA Connection with the HOA questionnaire, budget, and insurance documents. Turnaround typically runs a few business days to a couple of weeks depending on how fast the HOA responds — which is the real bottleneck in almost every SUA file.
Practical strategy for condo buyers
- Verify the project on HUD's site before you write the offer, not after.
- If the project is expired, ask the HOA whether recertification is in progress — that is often faster than a fresh SUA.
- If the project has never been approved, request the HOA budget, reserve study, insurance certificate, and delinquency report early. If the HOA will not cooperate, FHA financing is effectively off the table.
- Remember the HECM condo rules are separate: a reverse mortgage on a condo also requires project approval or single-unit approval.
Condo purchases still follow the same FHA loan limits for the county, the same 3.5% minimum down payment, and the same MIP schedule as a single-family purchase.
Approval thresholds at a glance
| Test | FHA standard |
|---|---|
| Owner-occupancy (existing project) | Generally at least 50% |
| HOA dues 60+ days delinquent | No more than 15% of units |
| Single-investor ownership | Capped by FHA concentration limits |
| Reserve funding | At least 10% of the annual budget |
| Commercial / non-residential space | Limited share of total floor area |
| FHA-insured units in one project | Capped by project concentration limits |
Every one of those tests is read from documents the HOA controls, which is why a cooperative management company is worth more to your closing date than any other single factor.
Timeline and cost reality
Single-Unit Approval reviews often finish inside two to three weeks when the HOA answers the questionnaire promptly. Full project approval realistically runs 30 to 90 days. Questionnaire fees charged by management companies commonly run $100–$400, and some HOAs charge separately for document packages. Build that into your contract timeline before you commit to a 30-day close.
Worked example: condo payment vs. single-family
A $300,000 condo with 3.5% down and a $320/month HOA assessment carries roughly the same total housing cost as a $360,000 single-family home with no HOA — because the assessment is added to your qualifying payment dollar for dollar. Run both scenarios in the payment calculator before you decide the condo is the cheaper path; sometimes it is, sometimes the assessment eats the entire difference.
Common reasons an FHA condo deal dies
- The project's approval quietly expired months before the listing went live
- Active litigation touching the structure, roof, or life-safety systems
- A single investor bought a block of units and blew past the concentration cap
- The HOA will not complete the FHA questionnaire, or charges a fee the seller won't pay
- Mandatory rental pooling or hotel-style services classify the project as a condotel
What to do before you write the offer
- Search the HUD Condominiums list by project name and confirm the expiration date
- Ask the listing agent whether any other FHA buyer has closed there in the last year
- Request the current budget and the litigation disclosure up front
- If the project is unapproved, ask your lender to price the Single-Unit Approval path
- Add a contingency tied to FHA approval, not just to financing generally