FHA Approved Condos: How to Find One and Where to Search

Written by Kim PinnelliUpdated: 28th Dec 2021
Share this article

Disclaimer: This post contains references to products from one or more of our advertisers. We may receive compensation (at no cost to you) when you click on links to those products. Read our Disclaimer Policy for more information.

Condos make great first-time home purchases, but they aren’t very easy to secure financing for. Most loan programs, including FHA loans, require approval to secure financing on it.

Why would loan programs care so much?

Condos are a different animal. They aren’t a single-family home where your value relies only on you, except for what goes on in the area.

Condos have a lot of shared property. If you buy into a development where most of the people don’t keep up with their monthly mortgage payments, it could decrease your unit’s value and even make you upside down on your loan, owing more than the condo is worth.

FHA-approved condos eliminate this issue and ensure you only buy a property that is a good investment for you and the lender.

What Are FHA-Approved Condos?

The FHA has guidelines that condos must meet. If they do, they become FHA-approved or eligible for FHA financing.

If a condo development isn’t FHA-approved, you can’t secure FHA financing on it. The FHA requires this because they guarantee the loans lenders write in their names.

The FHA doesn’t fund or underwrite the mortgage loans, but they promise FHA lenders they’ll pay them back a portion of what they lost if you default. They have a vested interest in your purchase and want to ensure it’s a safe purchase.

How Do FHA Approved Condos Work?

There are two ways you can get FHA-approved condos.

If the development is already FHA approved or your mortgage lenders ask the association to apply for it, you can buy any unit within the development with FHA financing.

If the development isn’t already FHA approved, you can ask for spot approval or approval of just your unit.

How (and Where) to Find FHA-Approved Condos

Before you can buy an FHA-approved condo, you must find one using these simple steps:

  • Navigate to HUD’s condo search tool
  • Keep your searches broad, such as searching by city, state, or zip code
  • Search by HOA name if you know where you want to live
  • Filter your search by approved or rejected developments

If you find a rejected development that you like, you can still request spot approval to see if you can get your unit approved.

When you use the tool, you’ll come across several terms. Here’s what they mean:

  • Approved – You are free to buy the condo with FHA financing. The development has already been approved, and you can move forward like you would any other purchase.
  • Approved/expired – Certifications last for 3 years. If the HOA didn’t recertify, the approval expired. They must recertify for you to buy a unit there.
  • Rejected – The FHA rejected the HOA’s application, but the comment section on the HOA tool should tell you why. You may still get a single unit approved if it’s nothing serious.

>> More: How to Get Mortgage Preapproval

What Is FHA Approval for Condos?

For a condo development to get FHA approval, they must meet the following:

  • At least half of the units must be owner-occupied. If an investor owns over half of the units, the development isn’t eligible for FHA financing because investment/rental units are riskier than owner-occupied units.
  • No more than 15% of the current owners can be past due on their HOA dues. Since the HOA dues fund the repairs, maintenance, and upkeep of the development, the FHA requires that at least 85% of owners are on time with their dues.
  • The HOA must have a decent reserve fund for the size of its development. Typically, at least 10% of the budget must go to reserves.
  • The development must carry adequate insurance, including a master or blanket policy that covers the entire development at 100% of the replacement cost of each unit.
  • Only 10% of the units can use FHA financing if at least 10 units are in the building. In buildings with less than 10 units, only 2 units can have FHA financing.
  • If any part of the building is used for commercial use, it must be 35% or less.

How to Buy FHA-Approved Condos

To buy an FHA condo, you must meet the FHA minimum requirements. Fortunately, they are easy to meet, even for first-time homebuyers:

  • Minimum 580 credit score
  • Maximum 43% total debt-to-income ratio
  • Stable income and employment for 2 years
  • At least a 3.5% down payment
  • Enough money to cover the closing costs
  • Proof you’ll occupy the property as your primary residence

You can search for a condo just like you’d search for a house, but I suggest working with a licensed real estate agent.

In addition to checking HUD’s website, a knowledgeable real estate agent will already know which developments in the area are FHA-approved. This saves you time and helps you beat the competition when bidding on properties.

>> More: How to Buy a House

Pros and Cons of FHA-Approved Condos

FHA-approved condos have their pros and cons. While it’s nice to know someone has your back, ensuring the property is good, there are downsides to consider.


  • FHA loans have flexible guidelines which make it easy for even first-time homebuyers to buy a condo
  • FHA loans are affordable since buyers need only 3.5% down, and they have competitive interest rates
  • You’ll know the condo and development is safe and secure physically and financially


  • You’ll pay mortgage insurance for the life of the loan
  • You must find an approved development or wait at least 3 months to see if the development is approved
  • Competition on FHA-approved condos is usually high

What If a Condo Is Not FHA Approved?

If a condo isn’t FHA-approved, you have a couple of options:

  • Discuss the option to get the development approved with your real estate agent or lender
  • Look at other condo financing options
  • Find another condo that is FHA-approved

You can’t get FHA financing on a condo that isn’t approved – there’s no getting around it. But, if you have your heart set on it, just know that it can take up to 3 months to secure approval, and approval isn’t guaranteed.

>> More: Learn About FHA Appraisal Requirements

Alternatives if Your Condo Is Not FHA Approved

Fortunately, if the development isn’t FHA approved, there are other ways to secure financing, including:

  • Conventional loans – If you have decent credit and at least 3% to put down (first-time homebuyers only), you may secure a conventional loan. Remember that the condo development must pass Fannie Mae’s approval, which is similar to FHA’s but slightly less strict.
  • VA loans – Veterans can buy condos with VA financing, but the development must be approved. If the development has FHA approval, it automatically has VA approval too. If not, the development must go through the approval process before you can secure VA financing for it.
  • USDA loans – If you buy a condo in a rural area, have a 640+ credit score and make less than 115% of the area’s median income, you may use USDA financing to buy a condo that requires 0% down and has flexible guidelines.

Bottom Line: How to Find FHA-Approved Condos

It’s not as hard as it seems to find FHA-approved condos, you just need to know what to look for. Using HUD’s tool is a step in the right direction, along with working with a licensed real estate agent.

Buying a condo can be a great investment when you find the right property, which means finding FHA-approved units.

Keep Reading:

Kim Pinnelli
Kim Pinnelli

Kim Pinnelli is a Senior Writer, Editor, & Product Analyst with a Bachelor’s Degree in Finance from the University of Illinois at Chicago. She has been a professional financial writer for over 15 years, and has appeared in a myriad of industry leading financial media outlets. Leveraging her personal experience, Kim is committed to helping people take charge of their personal finances and make simple financial decisions.