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FHA home loans are surprisingly flexible, allowing buyers to purchase single- and multiple-family homes as well as approved condominiums.

Federally backed mortgages come with some unique requirements, and this is especially true when using an FHA loan to purchase a condominium.

Condos differ from single-family homes in a number of ways. For example, condo associations can impose property sale restrictions. Other limitations are the result of shared walls and common spaces.

These differences can make condos a riskier investment in some cases. In order to mitigate that risk, homebuyers will need to prove that a condo complies with FHA loan condo requirements before their financing can be approved.

FHA Condo Loan Requirements

The guidelines for FHA loans and condos exist to protect homeowners and the FHA. FHA loan requirements are also geared toward ensuring the homeowner’s ability to freely sell their property at a value at or above what they paid for it.

Condos with higher percentages of owner-occupants and low restrictions on buying and selling are safer bets for homebuyers and more likely to be FHA approved.

FHA-Approved Condominium Project

An FHA loan can be used to purchase the following types of approved condos:

  • Detached
  • Attached
  • Semi-attached
  • Manufactured
  • Row house
  • Mid-rise
  • High-rise
  • Walk-up

If you know you’re interested in purchasing a condo, a good real estate agent can help locate FHA-eligible units in your area. The FHA also manages a list of condominium projects that have been previously vetted and approved for FHA financing.

Keep in mind that it’s not uncommon for condo associations to let their approval status lapse, so it’s wise to double check with the condo association.

Getting FHA Condo Approval

The easiest way to use an FHA loan for a condo is to find one that has already been approved. Condo projects that have been approved by Fannie Mae or the Department of Veterans Affairs can often be fast-tracked through the FHA approval process.

It’s not impossible to get a condo FHA approved, but it’s a months-long process. Generally, the FHA won’t even look at applications submitted by buyers and their real estate agents. It’s up to the builder, developer, or project manager to gather the appropriate documentation and request FHA approval.

Newly Constructed Condo Projects

New condo developments will need to apply for FHA approval by submitting a full project approval application.

There is also a pre-sale requirement for new construction condos and FHA loans. At least 70% of the condo units must be sold before the FHA will consider lending on a unit.

Since condo owners also own small shares of common areas, you’ll have better luck using an FHA loan to buy a condo in a completed development.

For phased developments, it’s not always feasible to wait until the project is complete. Assuming that there is a reasonable expectation of completion, the FHA may allow for a sale to close after they receive the following plans and certifications from the builder:

  • Development plan including specifications for shared facilities
  • Proof that owner occupancy and pre-sale requirements are met for each phase
  • If common elements are incomplete, 150% of expected completion costs to be held in escrow

FHA 203(k) Loans and Condos

The 203(k) program allows qualified FHA homebuyers to receive additional financing for home repairs. It is possible to use a 203(k) loan for a property in a condo association, but there are limitations.

For example, the FHA would not allow 203(k) financing for a condo in a development undergoing large-scale rehabilitation. No more that 5 units can be rehabbed at one time.

Rehabilitation projects are also limited to the interior of the unit, meaning you couldn’t use a 203(k) loan to replace siding or get a new roof on a condominium.

Finally, rehabilitation projects on condos are limited to structures that contain no more than 5 units, meaning 203(k) loans won’t fly for a unit in a high-rise condominium or a large development of attached condo units.

Site Condominium Units

Site condos are essentially single-family dwellings bound by condo association covenants and restrictions. In many cases, site condos don’t require special FHA approval at all.

Site condominium projects don’t include elements that are shared and commonly maintained, like pools, tennis courts, or private roads.

Unlike other condo developments, site condos grant homeowners full ownership of the unit, the land, and land improvements. These key differences mean site condos can be bought and sold freely.

Owner Occupancy Requirements

Owner-occupancy is one mark of a stable neighborhood. The FHA avoids giving mortgages for condos located in predominately renter-occupied developments.

In the past, they required as high as 80% owner occupancy, but the FHA has recently expanded those provisions. Homebuyers may be able to purchase a condo in a development where 35-50% of the units are not owner occupied, assuming additional conditions are met.

In any case, you'll need the following documentation to verify the number of owner-occupants in a development:

  • Proof of closed unit sales that certify owner occupancy
  • A list, chart or spreadsheet outlining each unit's occupancy stats, accompanied by a developed-signed certification
  • Copies of your purchase contract and a loan commitment from your lender

If owner occupancy falls below the 50% mark, you'll also need to submit the following for the HUD Review and Approval Process before financing is approved:

  • Proof that the condo association has enough capital to fund deferred maintenance
  • Proof that 90% or more of the units are up to date on their condo association fees
  • 3 years' financial documents that show acceptable financial management by the Condo Association

Ineligible Condo Types

When it comes to FHA loans and condos, the key is finding a property in a stable residential development that isn’t overly restricted by the association’s bylaws.

Condos are also ineligible for FHA loans if:

  • The condo is located in a coastal barrier area
  • More than 25% of the development is non-residential
  • The development is a condotel, converted hotel or rest
  • The project includes units that are rented on a less-than-monthly or month to month basis
  • The unit is a part of an assisted living facility
  • The bylaws give the condo association the right to restrict owner occupancy
  • The bylaws require rent-pooling agreements
  • The condo is a timeshare or houseboat

Determining if a Condo is FHA Approved

The condominium search tool on the HUD site is simple and thorough. You can use the search feature to check the FHA condo approval status of a specific project, or look for approved projects in your area.

If you can’t find a development right away, check with the condo association to be sure the development name matches the name listed in its bylaws.

Sometimes, condo associations let their FHA approval status expire. It’s always best to double check with the association before making an FHA offer on a condo, especially if there’s earnest money at stake.

Advantages and Disadvantages of Owning a Condo

The pros and cons of condo ownership largely depend on your goals and priorities as a homeowner, but there are some distinct advantages and disadvantages when it comes to buying a condo.


  • Affordability
  • Little to no lawn maintenance
  • Exterior repairs may be covered by the association
  • Amenities like pools and rec rooms may be available
  • A great option for many first-time homebuyers


  • Association fees can eat into your housing budget
  • Typically smaller than single-family homes
  • Renovations may be limited
  • Some associations have pet restrictions

It's a misconception that condos and FHA loans can’t go hand in hand. Overall, the government-subsidized FHA loan program is a flexible option for homebuyers with less than perfect credit history looking to purchase a property with a low down payment. It offers competitive rates and a good amount of flexibility, especially for first-time homebuyers. When it comes to FHA loans and condos, a little extra legwork can pay off.