Everything You Need to Know About FHA-Approved Condos

FHA approved condos allow buyers to take out FHA loans instead of regular mortgages, but these condos must adhere to specific requirements.
Written by Katherine Duffy
Reviewed by Melanie Reiff
Condos approved by the Federal Housing Administration (FHA) allow condo owners to take out FHA loans instead of conventional mortgages, which require a much smaller downpayment and lower credit score. To secure this kind of loan, your condo needs to meet specific requirements set out by the Department of Housing and Urban Development (HUD) and pass the FHA condo approval process. 
If you’re not sure you want to continue renting a property but you’re not quite ready for homeownership, buying a condo is a perfect compromise. While condos are great options for those looking for more affordable housing while building equity, condo mortgages can still be expensive. 
That’s where FHA-approved condos come in handy. An FHA-approved condo is just like a normal condo, but the development meets requirements set by HUD and can be paid for by an FHA loan, allowing people with lower incomes or credit scores to qualify.
Figuring out which condos are FHA-approved can be tricky due to the requirements and approval process. Thankfully,
, the
super app
home and car insurance
, is here to help. We’ve created a complete guide on everything you need to know about FHA-approved condos.

What is an FHA-approved condo?

An FHA-approved condo is similar to regular condos. FHA condos are still private units within a building of other units that share amenities like parking, building gyms, pools, and other building assets.
So, then, what’s the difference? Unlike regular condos, FHA-approved condos meet certain requirements established by the US Department of Housing and Urban Development (HUD) and are approved by the Federal Housing Association (FHA). This approval allows buyers to take out an FHA loan instead of a regular mortgage to purchase the unit. 
For approval, condominium projects need to have:
  • Proof of sufficient insurance coverage
  • Financial plans and documentation showing how the project manages its budget
  • Outstanding lawsuit statuses
  • Documentation of the project’s condition

FHA Loan Requirements

Considering an FHA-approved condo is your first step to getting approved for an FHA loan. There are a few other requirements you’ll need to fulfill before getting approved for this kind of loan:
  • A credit score of at least 580
  • A downpayment of at least 3.5% of the purchase price
  • A debt-to-income ratio of 50% or less
  • Ability to pay closing costs and the upfront mortgage premium if these costs aren’t included in your loan

What you need to know about the FHA condo approval process

If you’re hoping to get an FHA loan on a condo that isn’t FHA approved yet, there’s an approval process the unit must undergo before you can apply for your loan
First, condo buildings or individual units must complete either the HUD Review and Approval Process (HRAP) or a Direct Endorsement Lender Review and Approval Process (DELRAP). After the required paperwork is complete, the building or unit has to be appraised by the FHA to ensure it’s met the requirements for approval. 
The whole process can take anywhere from two to four weeks, depending on a few factors: 
  • The building’s age, as older buildings can take longer to approve 
  • The current FHA caseload
  • How quickly the FHA receives the documents
  • How many requirements the building or condo meets

FHA condo approval requirements

Here are a few key requirements a condo building has to meet to be FHA approved:
  • A maximum of 10% of the units can be FHA-insured in buildings with 10 units or more. If the building has less than 10 units, only two of those units can have FHA loans.
  • At least 50% of units must be owned and not rented. 
  • The condo has to have the required insurance and keep at least 10% of the Homeowners Association (HOA) budget saved in cash. 
  • At least 85% of the units have to be up to date on their condo fees.
  • A maximum of 35% of the property can be for commercial use.
  • The building has to be recertified to make sure it continues to meet these requirements every three years

FHA condo spot approvals

Recently, the FHA approval requirements have loosened to allow individual units to get FHA approval without the entire building being approved, making it much easier to get an FHA loan when purchasing a condo. This is called a “spot approval.”
 Your condo will need to meet these requirements to be spot approved: 
  • Your condo has to be move-in ready.
  • The entire building needs to have at least five units.
  • Manufactured housing (mobile homes) aren’t permitted for spot-approved condos. 
  • A maximum of 10% of the units can be FHA-insured in buildings with 10 units or more. If the building has less than 10 units, only two of those units can have FHA loans.
  • Your lender has to submit a questionnaire for approval by HUD. HUD uses this questionnaire to determine if your condo meets the requirements for FHA financing.
  • If HUD is satisfied with the questionnaire answers, your condo will be designated as a new condominium project insurable by the FHA.

The pros and cons of FHA-approved condos 

There are a few benefits and drawbacks of purchasing an FHA-approved condo. Here are the most common pros and cons: 


  • There are fewer loan qualification requirements: With an FHA-approved condo, you can apply for an FHA loan, which only requires you to put down 3.5% and have a credit score of 580
  • Your mortgage could be more affordable: Condos are generally less expensive than detached homes, which means your monthly payments will be more affordable than a mortgage on a house. Plus, your upfront costs are less with an FHA loan. 


  • Mortgage insurance is a must: While your upfront and monthly costs are typically less than if you bought a house, FHA loans come with additional costs. You’ll have to pay 1.75% of the loan upfront, plus a yearly fee ranging from 0.45% to 1.05% of your loan to cover mortgage insurance costs
  • It’s a competitive process: FHA-approved condos are in high demand, but even with less stringent requirements, there’s a limited supply of them. Other buyers will likely be interested in the condo you’re looking at, which can drive the price well above asking. 

How can I tell if my condo is FHA approved? 

The HUD keeps an online database of all FHA-approved condos on their
condominiums search tool page
, which is the fastest and easiest way to tell whether your condo is FHA approved. 
Whether you’re searching for a condo you already own or one you’re planning on purchasing, make sure you switch the status to “approved.” This will ensure that all of your search results are FHA-approved condos. 

How to find affordable insurance for your condo 

Whether your condo is FHA approved or not, you’ll need the right kind of coverage from a reliable insurance provider to keep you protected.
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Most condos aren’t FHA certified because of the slew of FHA approval requirements the condo building has to meet to get approval. Some of the most difficult requirements are the renter-to-owner ratio, the current fee ratio, and the requirement that only 10% of units in an FHA approved building can get FHA loans. 
Another reason is that many condo associations don’t prioritize this approval. The process can be a headache, and there are fees associated with approval for condo projects, which can dissuade many buildings from FHA approval.
FHA condo approval typically takes between two to four weeks, but this time frame depends on how old the building is and how busy the FHA is at the time of the approval process.
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