What is FHA single-unit condo approval?

Per HUD Mortgagee Letter 2019-13, FHA permits financing on individual units in condo projects that are NOT on the FHA Approved Condo List, provided the project meets certain conditions. Owner-occupancy must be at least 50 percent. The lender prepares a Single-Unit Approval package. This expanded FHA condo financing dramatically.

What is a non-warrantable condo on conventional?

A non-warrantable condo fails one or more Fannie Mae or Freddie Mac project standards. Common reasons: more than 50 percent investor ownership, single owner controlling more than 20 percent of units, ongoing litigation against HOA, inadequate reserves, commercial space exceeding 35 percent of total square footage, or specific insurance gaps. Non-warrantable condos require portfolio loans typically at 20 to 25 percent down and FICO 700+.

Can I get FHA financing on a non-warrantable condo?

Sometimes. FHA project standards differ from Fannie Mae. A condo that is non-warrantable for Fannie may still qualify under FHA single-unit approval or be on the FHA Approved List. Check the FHA Condominium Approval list at hud.gov before assuming the unit cannot be FHA financed.

FHA Condo Approval vs Conventional Non-Warrantable

FHA and conventional both require the condo project itself to meet standards, not just the borrower. The standards differ. A non-warrantable conventional condo may qualify on FHA, and vice versa.

Condo financing paths

Path	Key requirement	Best for
FHA Approved Condo List	Project is currently FHA-approved (lookup at HUD)	Standard FHA financing path
FHA Single-Unit Approval (HUD ML 2019-13)	Project meets owner-occupancy and financial criteria; lender prepares unit-specific package	Buyers in projects not on FHA Approved List
Conventional Full Review (Fannie warrantable)	Project meets all Fannie Mae Condo Project Standards	Standard primary residence
Conventional Limited Review	Primary residence at 80% LTV or less in established projects	Lower-LTV buyers, faster turn
Non-warrantable portfolio loan	Lender holds in portfolio; rate 1.0 to 2.0 points above conforming	Non-warrantable units with 20%+ down

FHA condo project requirements

Per HUD Handbook 4000.1 Section II.A.8.p:

Owner-occupancy at least 50 percent of units (lower in some sub-cases)
No more than 10 percent of units in arrears more than 60 days on HOA fees
Adequate reserves (at least 10 percent of annual budget)
Project insurance meets HUD standards (hazard, liability, fidelity, flood if applicable)
No more than 35 percent commercial space in mixed-use buildings
No more than 50 percent FHA-insured concentration in the project for new approvals
No ongoing material litigation against the HOA

Fannie Mae conventional condo standards

Per Fannie Mae Selling Guide B4-2.2:

Project must be complete (or nearly complete) with control turned over to unit owners
Owner-occupancy at least 50 percent for investment property loans (no requirement for primary)
No single entity owning more than 20 percent of units
No more than 15 percent of units 60 days delinquent on HOA
Reserves at least 10 percent of annual budget, or current reserve study supports adequacy
No more than 35 percent commercial space
No material litigation against HOA
HOA insurance meets Fannie standards
For post-Surfside (FL) projects: special assessments and structural integrity assessments required

Common non-warrantable triggers

Investor concentration above 50 percent
Single owner controlling more than 20 percent of units
Short-term rental (Airbnb) building exceeding HOA short-term rental thresholds
HOA litigation that could lead to special assessment
Material commercial space (above 35 percent)
New construction not yet 50 percent presold
Hotel-like services (front desk, daily cleaning, registration system)
Florida post-Surfside structural assessment incomplete

FHA single-unit approval workflow

Verify project is NOT on FHA Approved List (single-unit approval only for non-approved projects)
Lender requests HOA questionnaire and project documents
Confirm 50 percent owner-occupancy
Confirm financial criteria (delinquency, reserves, insurance)
Confirm no material litigation
Lender submits single-unit approval package to HUD via FHA Connection
Typical turnaround 7 to 14 business days

Practical note

Always ask the listing agent for the HOA questionnaire and project status before offer. Knowing whether the project is warrantable for Fannie, FHA-approved, or non-warrantable changes which financing paths are realistic and how much you should offer.

Sources

HUD Handbook 4000.1 Section II.A.8.p (Condominium Project Approval): HUD 4000.1
HUD Mortgagee Letter 2019-13 (Single-Unit Approval): HUD mortgagee letters
FHA Approved Condominium Search: entp.hud.gov/condlook
Fannie Mae Selling Guide B4-2.2 (Condo Project Standards): selling-guide.fanniemae.com