Find a HUD-approved Condo Project (2023)

If you’re using an FHA loan to buy a condo, you might be surprised to find out that not all condo projects are approved for FHA financing. But that doesn’t mean you can’t find a great condo to purchase with an FHA loan. You just have to know how to look.

The US Department of Housing and Urban Development, or HUD, has a list of condominium complexes it will and will not accept for FHA financing. A condominium complex must comply with certain standards set forth by HUD if it wants to get on the approved list. But if a condo project is on the list, you shouldn’t have much trouble buying the property with an FHA loan.

Click here for today’s FHA mortgage rates.

Basic FHA Condominium Requirements

Here are some basic requirements HUD looks for when approving a condominium complex:

  • The units must be at least 50% owner occupied. In other words, if there are 100 units in the complex, at least 50 of them need to be owned by the person who lives there. No more than 50 can be owned by a landlord and rented out.
  • No more than 15 percent of the owners can be more than 60 days delinquent on homeowner dues
  • There can be no pending litigation against the condo. This means no one is trying to sue the condo complex, and the complex is not trying to sue anyone.
  • The condo complex must maintain minimum insurance requirements so that the building is not destroyed by fire or other calamities.
  • The condo complex must be approved by FHA. This requires an extensive package of documents sent to and approved by FHA.

Searching the FHA Approved Condo List

Before you make an offer on a condo, you need first visit FHA’s website that lists currently approved condominium projects. Try searching by the condo’s name first. If you can’t find it on the list, try a broader search. For instance, try searching by just part of the condo’s name, or simply by city or ZIP code. Often, FHA lists the condo’s name a little differently than you know it.

If the condo you are interested in is on the list, make sure it says “Approved” under “Status.” The website will show condo complexes in “Rejected” status as well. Also, make sure the approval is not expired. There are many condo complexes listed that were approved at one time, but have gone past the two-year approval period and have not been renewed.

(Video) HUD Approved Condos

Click here for a free FHA condo rate quote.

Non-Approved or Expired Condos

If you can’t find your condo at all, or if it is in Rejected or Expired status, you may want to pass on any unit in that complex. The FHA approval process is not something your lender can do in most cases. Although there are some services that specialize in approving condos with FHA, the process can take longer than you are willing to wait.

In addition, approving a condo with FHA can be expensive and labor-intensive.

It’s hard to convince a condo association to go through FHA’s 95-page document to attempt approval, just so that you can buy a unit in the complex. However, there’s a chance that the HOA representatives are getting pressure from owners to get the condominium approved. After all, it can be very difficult to sell a condo in a non-approved complex.

FHA Alternative for Condo Financing

If the condo development you’re interested in is not FHA approved, you might consider putting 5%-10% down to get aconventional loan. Conventional loans, also called conforming loans, don’t have a set list of approved and rejected condos. Instead, your lender will send the HOA a questionnaire to complete, to make sure it complies with these requirements:

  • All common areas must be complete and owned by the unit owners or HOA.
  • At least 51% of the total units must be owned as primary residences or second homes.
  • The budget must be adequate to pay for operating costs and reserves.
  • At least 90% of the units must be sold and currently owned by unit owners (this applies only to existing projects, not new construction).
  • No single person or company may own more than 10% of the units in the project.
  • The project must be adequately covered by insurance.

Keep in mind that you need a higher credit score to qualify for a conventional loan rather than FHA.


To get a conventional loan rate quote or to find out more about this loan option, connect with a conventional lender here.

Using FHA to Buy a Condo is Harder Now without “Spot Approvals”

Buying a condo with an FHA loan is a lot tougher than it used to be. In 2010, a condo complex didn’t even need to be FHA approved to buy a unit there. The lender would request what was called a “spot approval,” which was a short questionnaire. The condo management would answer a few simple questions such as how many units were rented, and if anyone owned more than 10 percent of the project.

The completed questionnaire would be returned to the lender, and the FHA underwriter would approve the financing of that one unit. Now that Spot Approvals are gone, there’s no quick fix if the condo complex is not FHA approved.

There is speculation that a new FHA condo spot approval program will be introduced. At this point, it’s not certain, and it will be a much more difficult process than it used to be. Still, there is some hope that, down the road, FHA financing will be available for unapproved condo projects.

HRAP and DELRAP Condo Approvals

Ok, now for some boring stuff, if you’re interested! Today, there are two ways to get a condo project approved. HRAP stands for HUD Review Approval Process. This is where FHA itself approves a complex based on the package sent in by the condo’s governing body, usually the homeowner’s association or management company.

The other type of approval is called DELRAP, or Direct Endorsed Lender Review Approval Process. This is when an FHA-approved lender reviews the condo documents and certifies that the condo project meets FHA standards. Although this is the quicker option, most lenders don’t want to run this risk. According to HUD’s condo processing guide, a lender is liable if the condo is inappropriately approved. Here’s an excerpt from the guide: “Failure to comply with specific Quality Control requirements may result in administrative action and/or the imposition of Civil Money Penalties.”

(Video) How to check if your condo is FHA Approved

Would you certify that a condo project meets FHA standards under risk of penalty by HUD if that condo did not actually meet standards? Neither would most lenders.

HUD sees Condos and Single Family Homes Differently

It might appear that a home is a home, whether it be a condo, single family home. But condos are fundamentally different than free-standing homes. When owning a condo, you own the space of the condo from the walls in and you share the outside areas, called the “common areas” equally with all the other owners. You partially own the sidewalk, the swimming pool and the fitness center.

Condos have their own rules and regulations that owners must follow such as whether you can hang a plant from your patio or paint your door hot pink. Aspects of the entire condo complex that have little to do with your specific condo unit can affect your property. Are your neighbors paying their HOA dues? Are there faulty windows somewhere in the complex?

These factors and many more can put the marketability of your specific condo unit, or the one you want to buy, at risk. The last thing HUD wants is a condo unit it can’t sell to a new buyer, in the case that you default on your loan.

Get an FHA condo rate quote here.

How the Property Affects Loan Approval

When lenders evaluate a mortgage application they examine the property almost as much as they examine the borrower. A borrower may have an 800 credit score, a 25 percent down payment, and stellar debt-to-income ratios but if the propertydoesn’tqualify, there will be no loan. Lenders like real estate that is similar to property around it.If a property of the same type, square footage, bedroom count, etc., sold down the street, it indicates a market demand for property with those features.

(Video) Condo project not FHA approved?

These similar properties in the area are called “comparables” or simply “comps.” Condos generally have a lot of comps, since there are often a lot of similar properties in the same building or in other condo complexes nearby.

In this way, a condo can be very easy to appraise and approve. But when you’re trying to get an FHA loan, the property has an additional hurdle, which is HUD’s condo approval.

The FHA-Condo Combination is Perfect for First Time Buyers

FHA loans are popular among first timehome buyersbecause of reduced down payments and lenient credit standards. Condos are often priced lower than surrounding single family homes, making the FHA-condo combination an ideal strategy for a first timehome buyerto break intohome ownership. That is, if the condo project is FHA approved.

Borrowers can try for conventional financing, but conventional condo loans require a larger down payment. The buyer’s financial or credit situation might make conventional financing impossible.

If you anticipate getting an FHA loan to buy a condo, you should research whether the complex is FHA approved before you get your heart set on it. If it’s not HUD approved, ask the condo association if it has an approval application already in the works.If so, ask when the approval is expected. You may be able to buy your dream condo with an FHA loan after all.

Get an FHA mortgage quote for your upcoming condo purchase.

(Video) What Are Spot Approvals? HUD UPDATE Condo Guidelines On Non-HUD Approved Complex


Do VA condos have to be approved? ›

The short answer: Yes! The longer answer: Buying a condo with a VA loan isn't much different from buying any other home, but the condo complex does have to be VA-approved. The purpose of this approval is to ensure that those who are eligible for a VA loan aren't overly burdened by the HOA in any way.

What is a spot approval? ›

The FHA Single Unit Approval program, formerly known as Spot Approval, allows an FHA mortgage to fund in an association, without the project having to obtain FHA certification.

What is a HRAP? ›

HUD Review and Approval Process (HRAP) Direct Endorsement Lender Review and Approval Process (DELRAP) for lenders with unconditional Direct Endorsement authority and qualified staff for reviewing and approving condominium projects.

Is HUD approved the same as VA approved? ›

In the past, the VA used to simply accept properties that were approved by HUD (Dept. of Housing and Urban Development)as VA acceptable as well. This is no longer the case, but chances are if the property is HUD accepted, VA approval is within reach without too much trouble. Unaccepted is self-explanatory.

Can a condo be VA approved but not FHA? ›

No, Only Condominiums need FHA and VA approval. In general, if your Declarations or CC&R's use the word “Condominium” you will need FHA approval.

Why do Hoa not want FHA loans? ›

FHA requires HOAs overseeing condo communities, for instance, to limit the number of units that can be rented out. The effort needed to be certified for FHA mortgages, in other words, might be too great for some HOAs and their homeowner-members.

What is a single unit approval? ›

The SUA program will allow individual units to obtain FHA Loans without full project approval. This includes forward mortgages, refinances, and reverse mortgages. The SUA process must be handled by a lender that employs Direct Endorsement Underwriters.

What does FHA concentration mean? ›

FHA “concentration” means the percentage of units that are encumbered with FHA financing. According to FHA's site, 75% of the units in the condominium are financed with FHA loans.

Do you get paid for HRAP? ›

Will I Receive Pay for HRAP? You do not receive payment extra for your participation in these programs. However, you do maintain your pay as if you were at work on the base.

How do I get an HRAP? ›

All permanent party Soldiers may apply for HRAP by submitting a DA Form 31, Request and Authority for Leave, through their chain of command. Additionally, officers may also volunteer for HRAP duty in their hometowns or areas in which they are familiar, such as where they attended college.

What is HRAP and Delrap? ›

HRAP stands for HUD Review Approval Process. This is where FHA itself approves a complex based on the package sent in by the condo's governing body, usually the homeowner's association or management company. The other type of approval is called DELRAP, or Direct Endorsed Lender Review Approval Process.

Can I buy a HUD home with a VA loan? ›

HUD Homes may be purchased with a VA loan or any other loan. Assumable or Non-Assumable. You may find a home with a mortgage loan you can “assume” from the previous owner. This means that the lender is willing to transfer the old loan on the home to you.

Does a VA Condo approval expire? ›

In the past, VA and FHA had a reciprocal agreement, which meant all FHA Approved communities became VA Approved. This is no longer the case, and the VA independently reviews each condominium for Approval. VA Approval does NOT expire. It is a lifetime approval.

Does HUD guarantee VA loans? ›

The two government-backed loan programs have distinctions. VA loans offer no down payments and a federal guarantee while FHA mortgages can be obtained for 3.5% down and are insured through HUD. When comparing government-backed mortgage programs, the differences between FHA and VA loans are clear.

Why do some condos not accept VA loans? ›

The VA could deny a condo development for a variety of reasons including: The development has too many tenant-occupied compared to owner-occupied units. Too many condo owners are behind on their HOA fees. One person (or a single financial entity) owns too many units within the development.

Does FHA approval expire? ›

In most cases when the closing date is set and the agreements have been made, the end of the purchase process is in sight. But FHA appraisals have an expiration date -- they don't remain valid indefinitely due to housing market changes and other variables.

Do PUDs need to be VA approved? ›

Townhomes and PUDs (Planned Unit Developments) do not need to be FHA or VA approved, even if they are part of a complex comprised of contiguous units that look just like condos.

What does it mean to not be FHA approved? ›

Loan Limits

A house that is too expensive cannot qualify for an FHA loan. HUD sets loan limits annually, which vary by area and number of units . The FHA can only insure an amount up to this limit. A high-end home, with the standard FHA down payment of 3.5 percent, might have a loan amount that exceeds the limit.

What is considered a conventional loan? ›

A conventional loan is any mortgage loan that is not insured or guaranteed by the government (such as under Federal Housing Administration, Department of Veterans Affairs, or Department of Agriculture loan programs). Conventional loans can be conforming or non-conforming.

Is FHA a GSE loan? ›

FHA stands for the Federal Housing Administration. GSE stands for Government-Sponsored Enterprise. By default, FHA home loans fall into the category of GSE loans. These home mortgages are constructed to help lower-credit home buyers and those with low income the ability to purchase a home.

What is a HUD 9991? ›

Form HUD-9991 is used to process single-unit and loan-level approvals for both forward mortgages and Home Equity Conversion Mortgages (HECM). Form HUD-9992 is used to process condominium project approval applications.

Does the individual owner concentration comply with the FHA requirements? ›

The FHA limits individual ownership to 10 percent of the total units in the complex. Investors are not allowed buy units beyond the 10 percent. There are exceptions for condos with a small number of units. The FHA will not certify the condominium project if ownership is concentrated.

What makes a property VA approved? ›

If your buyer is able to find an agreeable lender, the manufactured home must meet the following conditions to earn VA approval: Must be properly affixed to a permanent foundation. Single-wide homes must be at least 400 square feet. Double-wide homes must be at least 700 square feet.

What is a 70% presale requirement letter? ›

70% presale certification. This may be required as a condition if unable to certify that 70% of units have been sold to person(s) other than declarant. This will be required for full approval.

What's the difference between a townhouse and a condo? ›

Generally speaking, condominium owners have an individual unit within a larger complex. Townhouse owners, alternatively, may share a wall with their neighbors, but they also own the structure of the home itself and the property's surrounding land.

What is the VA 55 year rule? ›

What is the VA 55-year-old rule? Veterans who receive VA disability benefits for service-connected conditions are exempt from periodic future examinations once they turn 55 years old. This includes veterans who will be 55 by the date of a future examination, according to the VA Adjudication Procedures Manual.

Is there a minimum credit score for a VA loan? ›

There is no minimum credit score requirement. Instead, VA requires a lender to review the entire loan profile.

Can you make too much money to qualify for VA benefits? ›

VA disability compensation is not income-based. Thus, the amount of money a veteran makes in a given year has no effect on his or her compensation.

Does the condominium project allow for live work arrangements? ›

A Live/Work Condominium Project refers to a Condominium Project that allows space within the individual Unit to be used jointly for non-residential and residential purposes. The Mortgagee must verify that the Condominium Project governing documents allow Live/Work arrangements.

What does legally phased mean? ›

A legally phased project requires that a supplement or amendment to the master deed or declaration be. recorded in the public records to formally make additions to the project. Lenders are able to approve legal. phases for projects provided the subject unit's legal phase meets all requirements of the Full Review. ...

Do VA condo approvals expire? ›

In the past, VA and FHA had a reciprocal agreement, which meant all FHA Approved communities became VA Approved. This is no longer the case, and the VA independently reviews each condominium for Approval. VA Approval does NOT expire. It is a lifetime approval.

Which is better condo or house? ›

A condo is usually less expensive than a free-standing house. Condos are much smaller in square footage, and maintenance is typically cheaper because you're only responsible for the interior of your home. You don't have to worry about landscaping, the roof or the exterior walls. The condo board or HOA covers those.

What is a condo vs apartment? ›

The main difference between a condo and an apartment is ownership. The condo has a unique owner, whereas an apartment is a part of a large residential building.


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