Whether youre a first-time homebuyer, moving to a new home, or want to refinance your existing conventional or FHA mortgage, the FHA loan program will let you purchase a home with a low down payment and flexible guidelines.580 Credit Score- and only -3.5% Down RELATED ARTICLES
FHA loan limits were established to define how much you can borrow for a HUD-backed mortgage. Each state has different limits, so be sure to look up your state to understand what is available for your FHA home loan.
For , the FHA floor was set at $498,257 for single-family home loans. This minimum lending amount covers most U.S. counties. The FHA ceiling represents the maximum loan amount and is illustrated in the table below.
Also for 2024, the FHA ceiling was set at $1,149,825 for single-family home loans. This represents the highest amount that a borrower can get through the FHA loan program. It applies to high cost areas in the United States and is illustrated in the table below.
Paying the upfront costs of buying a new home can be challenging. To help overcome this hurdle, many local and state agencies offer down payment assistance in the form of grants or second mortgages.
Getting an FHA-insured mortgage on a condominium can be more difficult than financing a single-family home. That’s because condos pose additional risks for the Federal Housing Administration (FHA). If you’re considering an FHA loan for a condo, it’s important to understand the program’s condo requirements.
In this comprehensive guide we’ll outline everything you need to know about FHA condo rules, including
- FHA condo project approval requirements
- Owner-occupancy and presale requirements
- Rules for new construction, conversions, and existing projects
- Documentation needed for approval
- Benefits of FHA financing for condos
Overview of FHA Condo Rules
The FHA insures mortgages on single condo units provided the project is FHA-approved. For a project to gain approval, it must meet certain condo requirements related to
- Financial stability
- Ownership and occupancy
- Construction completion
- Legal organization
- Physical condition
- Compliance with Fair Housing laws
Additionally, certain types of condo projects are ineligible for FHA financing altogether. These include
- Condo hotels
- Timeshares
- Houseboat projects
- Coastal barrier properties
The FHA’s strict condo rules are designed to minimize risk. If too many units in a project go into foreclosure, it can hurt property values building-wide. Tighter underwriting helps avoid this scenario.
FHA Condo Project Approval
There are several pathways for getting a condo project FHA-approved:
Full Project Approval
This involves a full review of the project’s financials, legal docs, ownership makeup, etc. to confirm it meets all FHA condo requirements.
Full approval lasts for 2 years, after which recertification is required.
Project Approval Using Alternate Approval Processes
If a project is already approved by Fannie Mae, the VA, or a state-approved condo reviewer, it can get expedited FHA approval.
Alternate approvals are also good for 2 years before needing recertification.
Single-Unit Approval
If a project isn’t approved, borrowers can still get FHA financing for individual units. This requires a streamlined condo review focused just on the specific unit and project eligibility.
Single-unit approval is only good for that particular mortgage.
Key FHA Condo Requirements
In addition to the broad eligibility standards mentioned earlier, FHA financing hinges on these key condo requirements:
Owner-Occupancy Percentage
No less than 50% of the project’s units must be owner-occupied or sold to owners who intend to live there.
FHA rules allow higher rental occupancy (up to 65%) for some established projects meeting special criteria.
Presales for New Construction
Builders must presell at least 70% of units in new condo projects before FHA will insure mortgages.
Budget/Reserves
The homeowners association (HOA) must have adequate funding collected through HOA fees to maintain shared property and amenities. At least 10% of the operating budget must be kept in reserves for maintenance and repairs.
Delinquent Assessments
No more than 15% of unit owners can be over 30 days late on HOA fees.
Commercial Space
Commercial or non-residential space is limited to 25% of the project’s total space.
Project Completion
All units, common elements, and amenities in new projects must be 100% complete before closing on FHA mortgages.
For existing projects, all common elements must be complete.
Condo Project Manager Certification
A representative of the condo association, HOA, or management company must complete FHA approval paperwork and certify compliance.
Unique Rules for New Construction, Conversions, and Existing Condos
On top of the standard requirements, FHA guidelines include unique stipulations for different types of condo projects:
New Construction Condos
- Must have at least 5 units
- Need presales of 70% before FHA approval
- Require 10-year warranty for high LTV financing
Condo Conversions
- Generally ineligible
- Can get approved if conversion occurred 1+ year ago and borrower was prior tenant
Existing Condos
- Need at least 2 years of HOA financial history
- Must be at least 1 year old for full project approval
- Can get single-unit approval if younger and meets other requirements
The documentation and timeframe for getting FHA condo approval also varies based on project type and age.
The Benefits of FHA Condo Financing
Despite stricter condo requirements, FHA loans offer key advantages for buying a condo, including:
- Low down payments as low as 3.5%
- Lenient credit score requirements starting at 500
- Low mortgage insurance premiums
- Ability to finance closing costs into loan amount
If you’re purchasing a condo and need flexible qualifying, FHA financing can be a great option – provided the project meets program guidelines.
Finding FHA-Approved Condo Projects
The Department of Housing and Urban Development (HUD) provides searchable online databases to look up FHA-approved condos. You can search by project name, location, or status.
HUD also maintains a list of condo projects that previously had FHA approval but are now expired. Lenders can submit recertification packages to get expired projects reapproved.
Alternately, your lender can advise if a project seems eligible for Spot Loan approval based on their experience with FHA condo rules.
Working with Experienced Professionals
As you can see, FHA condo guidelines are highly detailed. Working with professionals well-versed in these requirements is crucial for a smooth mortgage process.
Be sure to partner with a lender, real estate agent, and attorney experienced in FHA condo financing in your area. This will give you the best shot at finding an FHA-eligible condo and getting your mortgage approved.
With the right team guiding you, owning your dream condo with an FHA loan can become a reality.
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Whether youre a first-time homebuyer, moving to a new home, or want to refinance your existing conventional or FHA mortgage, the FHA loan program will let you purchase a home with a low down payment and flexible guidelines.580 Credit Score- and only -3.5% Down RELATED ARTICLES
FHA loan limits were established to define how much you can borrow for a HUD-backed mortgage. Each state has different limits, so be sure to look up your state to understand what is available for your FHA home loan.
For , the FHA floor was set at $498,257 for single-family home loans. This minimum lending amount covers most U.S. counties. The FHA ceiling represents the maximum loan amount and is illustrated in the table below.
| FHA Limits (low cost areas) | |||
| Single | Duplex | Tri-plex | Four-plex |
|---|---|---|---|
| $498,257 | $637,950 | $771,125 | $958,350 |
Also for 2024, the FHA ceiling was set at $1,149,825 for single-family home loans. This represents the highest amount that a borrower can get through the FHA loan program. It applies to high cost areas in the United States and is illustrated in the table below.
| FHA Limits (high cost areas) | |||
| Single | Duplex | Tri-plex | Four-plex |
|---|---|---|---|
| $1,149,825 | $1,472,250 | $1,779,525 | $2,211,600 |
Paying the upfront costs of buying a new home can be challenging. To help overcome this hurdle, many local and state agencies offer down payment assistance in the form of grants or second mortgages.
Learn About FHA Loans
Find out why FHA mortgages with low down payments are so popular with homebuyers.
Buying a Condo | FHA Loans | Should you buy a condo??
FAQ
Why do condos not accept FHA loans?
What is a FHA approved condo?
Is it harder to get a mortgage for a condo?
Is it hard to get FHA approved?
How do I get a FHA loan on a condo?
To get a Federal Housing Administration (FHA) loan on a condo, the property must be within an FHA-approved condominium project. Read on to learn more. In this article: What Are FHA-Approved Condos? FDA-approved condos are condos that meet the US Department of Housing and Urban Development (HUD)’s property eligibility requirements.
Do condos need an FHA loan?
The requirements for condo FHA loans are rather substantial and it’s easy to see why most condominiums will not opt for an FHA approval. Those that do, will get on the FHA list of approved condominiums, and you will be able to choose a condo from there. Be advised, however, that your options are limited to that FHA approved list.
What is an FHA approved condo?
An FHA loan is a mortgage insured by the FHA and issued by an FHA-approved lender. An FHA-approved condo is a condo that can be financed with an FHA loan. In order to get approved for FHA loans, a condominium community or single-unit residence has to be appraised to meet FHA loan standards.
What is a FHA condo loan?
FHA Condominium Loans are specifically geared toward those who purchase housing units in a condominium building. Condominium ownership, in which separate owners of individual units jointly own the development’s common areas and facilities, is for some a very popular alternative to home ownership.