Multicolored condo building under blue sky.

Home Buying

Everything You Need to Know About FHA-Approved Condos

October 24, 2018 | by Andrew Schmeerbauch

Multicolored condo building under blue sky.

Most FHA loan recipients choose to use the funds to purchase a single-family home. However, the FHS also approves of other ways to use the money it grants: Now, there are actually ways to find FHA-approved condos.

Here is everything you need to know about the process.

What is an FHA loan anyway?

An FHA loan is a loan insured by the Federal Housing Administration. The government specifically designed these home loans to help people with low-to-moderate incomes obtain financing to purchase a home.

Because the government backs up the loans, the lender can be 100% confident if something bad happens and the borrower defaults, then they will still get their money back. Because of this federal support for FHA financing, borrowers who would never qualify for a traditional mortgage finally have the opportunity to obtain one through the program.

The government started the Federal Housing Administration in 1934 during the Great Depression when foreclosures were at an all-time high. This left many Americans with ruined credit. To keep this tradition of assistance alive, modern-day FHA loan applicants can have credit scores as low as 580. This is much lower than the requirements for a traditional mortgage.

What are FHA-approved condos?

The great thing about receiving an FHA mortgage is that you don't have to use it to purchase a single-family home. You can use the money you receive to buy an FHA-approved condominium instead.

In order for a condo to be eligible to purchase with an FHA loan, it must meet the US Department of Housing and Urban Development (HUD)’s property eligibility requirements. Those requirements are:

  • Condo projects must consist of at least two units.
  • The condo complex must not use more than 25% of the project’s total floor area commercially (although the HUD can make exceptions up 50+%).
  • One investor/entity can't own more than 10% of the units. This excludes unsold or unoccupied units that the builder still owns.
  • This excludes unsold or unoccupied units that the builder still owns.
  • At least 85% of all units’ homeowners association fees must be up to date.
  • Units must be covered by hazard, flood, liability and other insurance required by state law.
  • People who actually live there full time should own at least 50% of the units in the community.

FHA condos also must make the following financial documents available for review:

  • The current year’s budget
  • Current balance sheet
  • Actual income
  • Expense statement for the project
  • Possibly bank statements

Condos that meet these requirements must also apply to be added to the official list of FHA-approved condos. Every two years, it must reapply and become re-certified.

This approval process can begin up to six months prior to the expiration date. They can also wait to start it until six months after the expiration date. If they don’t complete the approval within this time frame, then the management company must completely reapply.

Site Condos: the FHA Exception

If a condo complex is not on the official FHA-approved condos list, then it must go through the approval process. However, there is one exception: site condos.

A site condo must meet the following requirements:

  • Single-family and completely detached from each other.
  • No part of the structure is a common area.
  • Insurance and maintenance costs fall solely on the unit holder.

How do you find FHA-approved condos?

You can find FHA-approved condos by searching on the HUD website's official database. If you prefer a more personalized approach, you can also work with a local real estate agent to find acceptable condos in your immediate area.

If you would like to own a condo through the FHA loan program, your first step should be to meet with an FHA-approved lender. The entire process of buying a condo should take no more than 30–60 days. This includes applying for and receiving the FHA loan. Be sure to complete your paperwork properly, as errors might cause delays.

Buying a Condo Instead of a House

Condos tend to be in more urban locations, which typically gives residents more immediate access to more amenities and culture than those who live in the suburbs.

There is typically no lawn maintenance on condos simply because they do not have them. This factor is appealing to many. Many condo complexes also have doormen and desk people. Lots of owners cite this as a reason they feel safer in their condo communities rather than in single-family homes.

Condo complexes might also have a custodial staff, which is a big plus for most.

‧ ‧ ‧ ‧ ‧

Ready to buy the FHA-approved condo of your dreams? The Clever team is here for you. Call us today at 1-833-2-CLEVER or fill out our online form to get started.

What's Next

Find Your Dream Home With A Top Agent And Save Thousands

Learn how you could save thousands when you buy a home with Clever!

Learn More

Top Real Estate Agents - Lower Fees

Enter your zip code to see if Clever has a partner agent in your area.


If you don’t love your Clever partner agent, you can request to meet  with another, or shake hands and go a different direction.  We offer this because we’re confident you’re  going to love working with a Clever Partner agent.

Buy With A Top Agent

when you buy your next home with Clever