If the condo you wish to purchase with an FHA loan isn't already on their approved list spot approval may be your solution. Here are the requirments.
1. The condominium project must be complete. There should
be no ongoing or anticipated addition of any units, common
elements, and/or facilities.
2. Control of the common areas of the project must have
been turned over to the unit owners association for at least one
3. The owners association must provide evidence that the
project has the appropriate hazard, liability and flood
4. Individual units in the project must be owned in fee
simple or be an eligible leasehold interest. The project's
legal documents must provide for undivided ownership of
common areas by unit owners. By virtue of this ownership,
unit owners must have the right to use all facilities and
unrestricted common elements.
5. The project's documents should not place any legal
restrictions on conveyance. Any provisions that seek to
limit the free transferability of title is generally
unacceptable. Such restrictions include rights of first
refusal and restrictive covenants. Certain governmental or
nonprofit programs designed to assist in the purchase or
rental of low-or moderate-income housing are exempted from
the restrictions on conveyance provisions. The Department's
policy on the free assumability and transferability of
property is set forth in 24 CFR 234.66.
6. At least 90% of the units in the project must have been
7. At least 51% of the units in the project must be owner-
8. No single entity may own more than 10% of the units in a
project. "Entity" includes an individual partnership,
corporation, limited liability company, limited liability
partnership, joint venture, investor group or other natural
or legal person qualified to hold an interest in real
property. The 10% restriction does not apply when the
ownership of less than three units would disqualify an
otherwise eligible project.
9. For condominium projects
having more than 30 units, no more than 10% of the units may
have FHA insured loans at any given time. Condominium
projects consisting of 30 units or less, can have up to 20%
of the units encumbered by FHA insured mortgages under the
spot loan rule.
Note: FHA says to obtain a variance from these rules will likely require having the entire building approved for the same variance which is no longer a spot approval. For more info on FHA insured loan programs click here.