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Condos & Financing - FHA approvals

Mortgage and Lending with Annie Mac Home Mortgage NMLS ID 19375


If you own or are looking to buy a Condo/Townhome with an association or management fee collected, you will want to be aware of a potential issue regarding financing. The majority of lenders will require that the condo association provide proof of financial stability and other reporting before you can obtain mortgage financing. FHA maintains a list of approved associations, but the list contains only about 25% of all condos! Many of the previously approved condos had their approvals revoked or expired in 2011 & they failed to re-apply, or could not qualify.

Realtors & owners/buyers can look here to see if their condo is approved:

https://entp.hud.gov/idapp/html/condlook.cfm    (This is the official HUD site.)


http://www.fhaapprovedcondomap.com/east-coast/ (this is a great mapping site that is interactive.)

This has been a hot topic and a very frequently requested piece of information coming from my local agent partners who either have a buyer or a listing for a specific condo and want to know if financing will be available.  You may want to ask your association about this, and participate in condo board meetings to be aware of the current state of your community, as it can affect your ability to sell, and the value of your home.


According to a few websites, FHA may soon be revising the requirements for FHA approval. One blog, Maintenance Manager suggests, quoting the LA Times, that “many HOA boards have not sought approval from the FHA because of three major barriers. However, things could be changing. According to the LA times, ‘the Federal Housing Administration is readying changes to its controversial condominium rules that have rendered large numbers of units ineligible for the agency’s low-down-payment insured mortgages.’”

FHA requirements are burdensome, so few associations seek FHA approval. Some experts have suggested that as few as 25% of condo associations have obtained FHA approval.

According to The Maintenance Manager, some of the most criticized limitations are:
• Non-owner occupancy. The FHA requires that no more than 50% of the units in a project or building be non-owner-occupied.

• Delinquent condominium association fee payments. The FHA refuses to approve a project where more than 15% of the units are 30 days or more behind on payments of condo assessments to the association.

The Maintenance Manager goes on to say that the “FHA has imposed additional requirements, including those related to insurance and reserves which produce rules that can create harsh legal liabilities for condo board officers if applications for FHA approvals contain inaccuracies.

There are dozens of web-based companies that will assist an association with the process of submitting docs to HUD for approval and fees average about $750-$1200 for this service.

Steven Cook
No Longer Processing Mortgages. - Tacoma, WA

Jeff -- this is a good explanation of the problems to be faced by those trying to buy condos with an FHA loan. It also lays out some of the reasons condo boards may not want to work with FHA.

Dec 11, 2012 02:28 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

So many of our condo/townhome complexes have not renewed their FHA status, and are not approved.    Thanks for this information!

Dec 27, 2013 09:28 PM