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FHA-Approved Condos: The Approval Process And Where To Find Them

March 28, 2024 6-minute read

Author: Carla Ayers


If you’re looking to build equity but don’t want to maintain an entire property, a condominium (condo) might be the perfect place to call home. One option for financing your condo is an FHA loan. FHA-approved condos can be a challenge to find, so let’s explore some tips and tricks that might help you get into your new home.

What Is An FHA-Approved Condo?

The Federal Housing Administration (FHA) is a part of the U.S. Department of Housing and Urban Development (HUD). HUD administers federal aid to local agencies that manage housing for low-income residents. The agency also backs home loans for many Americans through the FHA. 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. Once the community or single unit is approved, it receives a condo ID number. Prior to 2019, an entire condominium community needed to go through the approval process. With the rule change in 2019, individual condo units can be approved as well.

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Why Does A Condo Need To Be Approved For An FHA Loan?

Condominium communities seeking FHA loan approval need to complete the HUD Review and Approval Process (HRAP) or Direct Endorsement Lender Review and Approval Process (DELRAP) for lenders. The approval timeline depends on the original structure of the condominium complex. Older properties with a lot of special features could take longer to approve.

Once the condo community is approved through HRAP or DELRAP, the property receives a condo ID and submission number. The community is now identifiable as one that can accept FHA-insured loans.

How To Get A Condo FHA-Approved

If a condominium community isn’t already approved, a borrower can initiate the process for a single unit. Approvals for an FHA-approved complex are more involved than the process for an FHA-approved house. In addition to the standard FHA appraisal safety checks, the financial viability of the condo development is evaluated because the communal resources are part of the total property value.

In order for a condominium project to receive FHA loan approval, the complex must provide:

  • Proof of insurance coverage
  • Paperwork outlining the property’s financial condition
  • An assessment of the property’s physical condition
  • Confirmation of any pending lawsuits' existence

Single-unit condominiums have a different set of standards to meet in order to be approved by the FHA. Some of these requirements include that:

  • The condo project has at least five single-dwelling units
  • The single unit is not a manufactured home
  • The unit is ready for occupancy (it cannot be under construction)

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FHA Condo Approval Requirements

To qualify for an FHA-approved condo, you’ll need to meet the following borrower requirements:

  • Credit score: Your qualifying credit score will need to be 500 or higher, but lenders may set their own requirements. Rocket Mortgage® requires a median credit score of 580.

  • Down payment: FHA-insured loans require a down payment of 3.5% for borrowers with a credit score of 580 or higher. If your score is between 500 and 579, you’ll need to make a 10% down payment.

  • Debt-to-income ratio (DTI): The DTI requirement for an FHA loan typically depends on your lender and yourcredit score. Most lenders require a DTI of 43% or less.

  • FHA mortgage insurance premium (MIP): You’ll have to pay an FHA MIP when you take out an FHA loan. There’s an upfront MIP payment that’s equal to 1.75% of the loan’s value, and you’ll also pay an annual MIP that depends on your loan-to-value ratio (LTV), down payment amount and mortgage term length.

  • Primary residence: The condo must be considered a primary residence, or a home you live in for the majority of the year.

FHA Condo Approval Restrictions

Condominium FHA approvals come with restrictions designed to approve communities and units that will maintain or increase in value over time. These are some baseline requirements:

  • The condo must be completed, or at least complete its current phase of construction, not just proposed.
  • In communities with at least 10 units, up to 50% of the units can be FHA-insured. For communities with fewer than 10 units, only two units can be FHA-insured.
  • At least 50% of all units must be owner-occupied.
  • The condo association must keep at least 10% of the HOA budget in a cash reserve.
  • At least 85% of the units must be current on their condo dues, with limited exceptions for properties where a reserve study has been done.
  • No more than 35% of the property can be used for commercial use.
  • The community or individual unit must be recertified every 3 years to ensure it still meets the requirements.

How To Find FHA-Approved Condominiums

You can find the FHA-approved condo list through HUD’s approval list website. Simply input the state and county where you are interested in purchasing a condo. You can search for already-approved communities or those that have been submitted and are awaiting approval.

If you’ve already found a condo you love, you can check the HUD website to see if it has been through the approval process. You may need to contact the condo association to see if a condo ID is available and whether the application process has started.

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The Pros And Cons Of FHA-Approved Condos

FHA loans have more flexible borrower requirements than other loan types. However, there are also some downsides to financing a condo with an FHA loan. Let’s recap some of the pros and cons of FHA loans for FHA-approved condos.


  • Flexible loan terms and lower interest rates
  • Lower down payment requirements than other loan options
  • Government ownership of your loan rather than ownership through a private lender


  • Required upfront and annual MIP payments
  • FHA-approved condos need to be recertified every 3 years
  • There’s a limited supply of FHA-approved condos for potential buyers

Alternative Condo Loan Options

It can be disappointing when you find the perfect condo, but it’s not approved for an FHA loan. Speak with your lender to see what other condo loan options are available to you. Let’s walk through some common mortgage alternatives.

  • Conventional loans: A conventional home loan is a mortgage option that can be used to buy a condo with as little as 3% down. Keep in mind that conventional loans require private mortgage insurance (PMI) with a down payment of less than 20%.
  • VA-approved condo loans: Eligible borrowers may also be able to use a VA loan to finance a condo purchase. However, not all lenders allow for this property type. Check the specific borrower and property eligibility requirements with your lender before applying.
  • Fannie Mae and Freddie Mac condo loans: You may be able to finance a condominium through either the Fannie Mae HomeReady® or Freddie Mac Home Possible® loan program. You’ll need to meet specific credit score, down payment and other loan requirements to qualify for the HomeReady® or Home Possible®

FHA-Approved Condo FAQs

Depending on your situation, an FHA loan may be the best option for financing your condo purchase. Do you have more questions about the FHA condo approval process? Let’s explore some additional FAQs.

Why does a condo need to be approved for an FHA loan?

Since an FHA loan for a condo is backed by the FHA, the agency wants to be certain the community and the unit will maintain its value. FHA loans have more lenient borrower requirements than other types of loans, which can pose some level of risk for the FHA. Because of the additional risk, the FHA and HUD mandate FHA-specific appraisals and recertification for FHA-approved condos.

What other types of properties does the FHA approve?

Some other examples of properties that can be purchased with an FHA loan include single-family homes, multifamily homes and certain manufactured properties. You can purchase up to a four-unit property with an FHA loan through Rocket Mortgage.

Bear in mind that FHA loans can only be used to finance primary residences, not investment properties or second homes.

The Bottom Line: Is An FHA-Approved Condo Right For You?

If you’re ready to purchase a condo, an FHA loan may be an option for you. FHA loans have more lenient loan terms and lower down payment requirements than other types of home loans. For first-time home buyers looking to dip their toe in homeownership, FHA loans provide an opportunity to purchase an FHA-approved condo.

Buying any type of home is a big decision, so it’s best to speak with a lender or real estate professional to weigh all of your options. If you’re interested in getting a mortgage, start the approval process today.

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Carla Ayers

Carla is Section Editor for Rocket Homes and is a Realtor® with a background in commercial and residential property management, leasing and arts management. She has a Bachelors in Arts Marketing and Masters in Integrated Marketing & Communications from Eastern Michigan University.