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FHA condo loans are available for projects on the FHA approved list--if you need to have a condo project added to the FHA approved list should discuss the situation with the lender.

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News and Updates for Homeowners

FHA Condo Loan Myths

December 4, 2014 - We frequently handle questions about FHA condo loans. One variation on the typical “What does it take to get my condo project on the FHA approved list?” question goes like this:

“I live in a condominium of 275 homes. We are getting complaints from mortgage companies that we are not FHA approved. We meet all legal guidelines that are required just not for FHA approval.”

“We were told by someone that FHA has just recently stopped approving condos for mortgages, is this true? Also what are guidelines that a HOA must meet to be approved for FHA if it were to be considered?”

After checking the FHA/HUD official site, we could find no Mortgagee Letters or press releases from the FHA stating that condos would no longer be eligible for FHA loans.

FHA condo loans are available for projects on the FHA approved list--if you need to have a condo project added to the FHA approved list should discuss the situation with the lender.

FHA loan rules state that a condo project must meet a basic set of requirements in order to be declared eligible for the FHA approved list. Those requirements include the following as found on the FHA official site:

“Eligible condominium projects are those that have been declared and exist in full compliance with applicable state law requirements of the jurisdiction in which the condominium project is located, including good standing with the State, and with all other applicable laws and regulations.

FHA insures condominium single unit loans for up to 30 year terms to purchase or refinance a unit in an FHA-approved condominium project. The condominium project must be primarily residential, contain at least two (2) dwelling units and can be detached, semi-detached, a row house, a walk-up, mid-rise, high-rise, including those with or without an elevator, or manufactured housing.”


You’ll find that information stated in a document called the FHA Condo Project Approval and Processing Guide. It also adds the following prohibitions on some types of condo projects that do not meet FHA standards for single family loans:

“FHA will not insure mortgages that are secured by units in certain types of condominium projects, regardless of the characteristics of the unit mortgage. Loans secured by units within the following types of projects are not eligible for FHA insurance. The list below is not an exclusive list of ineligible project types as there may be other projects with similar features that would be ineligible for FHA insurance:
  • All projects not deemed to be used primarily as residential
  • Projects with mandatory rental pooling agreements that require unit owners to either rent their units or give a management firm control over the occupancy of the units;
  • Projects that restrict the owner’s ability to occupy the unit
  • Projects where more than 25 percent of the total space is used for nonresidential purposes
  • Live/work units where more than 25 percent of the total project or unit square footage is used for nonresidential purposes
  • Condominium Hotel or “Condotels”
  • Projects that are managed and operated as a hotel or motel, even though the units are individually owned;
  • Projects with names that include the words “hotel” or “motel”;
  • Projects that include registration services and offer rentals of units on a daily, weekly or monthly basis;
  • Hotel or motel conversions (or conversions of other similar transient properties)”

What does it take to get your condo project added to the FHA approved list? You can learn more about the guidelines via this document from the FHA/HUD official site:

www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-19ml.doc