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FHA-Approved Condos: A Buyer’s Guide

HUD's search tool can help you find FHA-approved condo complexes, but you can also get an FHA loan for a condo that's not in an approved development.

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Updated · 3 min read
Kate Wood
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Chris Jennings
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Nerdy takeaways
  • Condos are an affordable, lower-maintenance option for first-time homebuyers or people looking to downsize.
  • To find FHA-approved condominium complexes, use HUD’s online search tool or ask a buyer’s agent to run a list.
  • It’s possible to get FHA financing for one condo unit that’s not in an approved community.
  • The FHA relaxed its rules in 2019 to make it easier to get a single unit approved. (Still, expect paperwork.)
There’s a lot to love about condos: For starters, they’re usually less expensive than standalone single-family homes. Upkeep is easier, since they’re smaller — plus, condo fees pay for help with maintenance. And if your credit score needs a little work, you can buy a condo with a low-down-payment mortgage backed by the Federal Housing Administration.
The rules for buying a condo with an FHA loan have changed in recent years. Here are a few shortcuts to help you start your search for an FHA-approved condo.
» MORE: Learn the basics of FHA loans

What to know about FHA-approved condos

The FHA is part of the U.S. Department of Housing and Urban Development (HUD). FHA loans are often attractive to first-time home buyers since they offer low down payments coupled with more lenient credit score and debt-to-income requirements than conventional mortgages. Buyers can get an FHA-insured mortgage for several home types, including single-family homes, duplexes and multifamily homes, manufactured homes and — yes — condos.

Borrower requirements

As an FHA loan borrower, you'll need to meet the following requirements.
Borrower requirements
Details
Credit score
  • 580+ = 3.5% down
  • 500–579 = 10% down
Down payment
  • Minimum 3.5% (580+ score)
  • 10% (500–579 score)
Employment and income
  • Minimum 2-year employment history
  • Verifiable, stable income
Debt-to-income (DTI) ratio
  • Typically 43% or lower
  • May allow up to 50% with strong compensating factors
Primary residence
  • Must occupy the condo as a primary residence
  • No investment or vacation use
Mortgage insurance
  • Upfront MIP required
  • Annual MIP paid monthly

Condo requirements

To receive FHA financing for a condo, the unit and project must meet several requirements. For instance, the unit must be FHA-approved or qualify under FHA single-unit approval (more on this below), undergo an FHA appraisal, and meet the FHA’s minimum property standards.
At least 50% of the units in the condominium project must be owner-occupied. You’ll also want to confirm that the HOA is financially stable, with adequate cash reserves, a low level of unit owners delinquent on their HOA dues, and no pending litigation that could potentially impact the value of the unit or result in a special assessment.
» MORE: What to know about buying a condo
Did you know...
A condo, short for condominium, is part of a multiunit complex with shared walls among neighbors. You own your unit from the walls in but not the land underneath. Condo fees pay for maintenance and amenities in common areas.
» MORE: Condos, townhouses and co-ops: What’s the difference?

Buying an FHA-approved condo

There are two paths to buying a condo with an FHA loan: buying in a complex where all units are FHA-approved, or seeking approval for a single unit.

Buying in an FHA-approved complex

This is the most straightforward way to buy an FHA-approved condo.

What it means

The entire condo community is already approved by the FHA.

Why it’s easier

The HOA has already submitted all the necessary paperwork to the FHA. This shows the FHA that the community is safe and viable, from its insurance coverage to the physical condition of the buildings. It can also save you time and speed up the approval process.

Important note

Condo approvals expire every two years, and the development must apply for re-certification to ensure it’s still in compliance with HUD requirements. If expired, the condo must go through single-unit approval.

Seeking single-unit approval

If the condo you want to buy isn’t an FHA-approved lender development, you can still apply through your FHA-approved lender for single-unit approval.

What it means

Single-unit approvals are awarded on a case-by-case basis. Instead of requiring the entire condominium project to be FHA-approved, the FHA evaluates one specific unit.
In this scenario, your FHA-approved lender would work with the complex’s management or HOA to file paperwork with the FHA and request single-unit approval. If the condo meets FHA eligibility requirements, the FHA will issue final approval, allowing your lender to move forward with the loan process.

Important note

If you go this route, leave yourself some wiggle room in your homebuying timeline for extra paperwork and back-and-forth. And you’ll definitely want to work with a lender that’s familiar with the ins and outs of FHA loans.
» MORE: See NerdWallet’s best lenders for FHA loans

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How to find an FHA-approved condo

HUD's condominium search tool is a quick way to see an FHA-approved condo list for your area. You can narrow your search by ZIP code, city, state or county.
If you’re working with a buyer’s agent, they can use the multiple listing service (MLS) to run a list of FHA-eligible condos in your area. Especially if you’re a first-time buyer, it helps to work with a buyer’s agent who’s familiar with the unique requirements for FHA loans.
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Do you still need an FHA appraisal for a condo?

Yes. FHA approval for condos in FHA-approved complexes is similar to the process for an FHA-approved house. Even if the entire development has been OK'd, you'll still need an FHA appraisal to ensure that the individual unit you want to purchase meets the agency's standards.
An FHA appraisal is separate from a home inspection, but it ensures the property meets basic health and safety standards.
» MORE: Use our FHA loan calculator to estimate your monthly payment
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