Why you should make sure your condo is on the FHA approved list



Editors Update: Loan limits are different than what’s reflected below from when this article was originally written.  Check with your local FHA approved Mortgage Originator to see what your loan limits are (or click on the link in the second paragraph).  

Please click the links below for current FHA loan limits. 

If your condominium is in a price range that would support FHA financing, you should contact your Home Owners Association to verify that your condominium is indeed on the FHA approved list.  Even if you’re not planning on selling or refinancing anytime soon, if your condo is not on FHA’s list, it can impact the value of your condo.

As of today, the FHA loan limit for the tri-county (King, Pierce and Snohomish) areas for a single unit dwelling is $567,500 $362,790.    If your condo is valued at approximately $650,000 $380,000 or less, it may be attractive to home buyers are utilizing FHA financing.  With fewer programs for first time home buyers, FHA insured mortgages are a popular selection.   If your condo is not approved for FHA financing, you may be limiting qualified buyers.   Fewer home buyers means that the condo that’s for sale in your complex, may not sale for as much as it could have.  This may translate to lower values for all in your condo complex.

Another reason why you should make sure your condo is on the FHA approved list is because you or one of your neighbors may need to use FHA financing to refinance.  As a result of our current mortgage landscape, fewer mortgage programs are available for people who may not have the highest credit scores or who need a mortgage with a higher loan amount.   FHA insured mortgages are not credit score sensitive and will allow up to an 85% 95% loan-to-value for a cash-out refinance at a competitive interest rate.  Not having FHA insured mortgages as an option to you and your neighbors who need to refinance may have damaging long term results such as a short sale or foreclosure if they are heading for financial troubles.  Foreclosed properties also bring down the values of neighboring homes.

Ask your Home Owners Association if your condo is FHA approved.   If your condo has phases; each specific phase is considered and may or may not be approved.   You can also check HUD’s site and contact your local Mortgage Professional to verify whether or not your condo is on the FHA approved list (FHA’s approved condo site can be confusing and easy to assume your condo is approved).

Here are a some of the requirements for condominiums to meet FHA’s guidelines:

  • At least 51% of the total units in the project must be owner occupied.
  • At least 90% of the total units in the project have been sold.
  • No single entity owns more than 10% of the total units in the project.
  • The project, including common areas, is complete with no special assessments and no legal actions pending.
  • The owners association has a reserve plan and a reserve fund , separate from the operating account that is adequate to prevent deferred maintenance.

I recently had a hard working single mom contact me who needed to restructure her debts and wanted to use her mortgage to do so.   Her credit scores were average and a few months ago, I would have been able to provide her several mortgage options.   In today’s market, the only mortgage available for her (excluding hard money) was FHA.

Unfortunately, her condo phase was removed from the approved list due to the reserve account dipping below the amount that was considered “adequate”.  We discovered at the time of the refinance, the reserve account were back to an acceptable amount.   The HOA just needed to have an audit completed in order to be considered back into FHA’s good graces.   FHA does allow “spot” approvals, however, if your condo has been removed from the list, a spot approval is not an option.  Apparently the cost of the audit was approximately $2,000 and the manager of the HOA was in no hurry to accommodate my client or us.

Since the Phase her condo is located is not FHA approved, she cannot proceed with FHA financing which would have saved her $450 per month and would have switched her from an adjustable rate mortgage to a 30 year fixed FHA insured mortgage.

It truly is in your best interest and your neighbors, if your condo is near the FHA loan limits, to make sure your condo phase is on the FHA approved list.   As the process may take weeks to complete, I strongly encourage you to take action now.   Don’t let your HOA be lazy…you may need to rally the support of your neighbors of your condo phase.  It’s well worth it to protect the value of one of your largest investments.


  1. dale hano says:

    we have 40 two unit buildings inour condo complex, one above the other. could it be called duplexes?

  2. Dale, it sounds like condo’s to me. It cannot be both condo and duplex (as far as a lender is concerned).

  3. elizabeth says:

    how long does it take to have a builder have it’s last 10% new construction condo/townhouse aprroved from fha so he can sell his few units left to fha aprrove buyers?

  4. Dont forget to remind these homeowners that they are the HOA. If an HOA is being “lazy” then that homeoowner is just as at fault. If your client wanted the HOA to be proactive on this item, I hope you encouraged your client to participate with their board! I say this because its easy to assume that someone else will do this work, but in an HOA every homeowner should pull their own weight. If you dont know what an HOA is and how they are operated, make sure you research it!

  5. D, I know this all too well. The last condo I lived in, I wound up being elected to VP of the HOA…it’s not a fun job but someone had to do it!

    I’ve always felt that you shouldn’t just sit back and gripe if you’re dissatisfied–get involved!

  6. By the way, with loan limits currently at $417,000 and $567,500 for FHA Jumbo/High-Balance for King, Pierce and Snohomish counties–there is even more incentive to make sure your condo is FHA approved. Plus conventional mortgages currently have a price hit of 0.75% if you have less than 25% home equity (or down payment) and if your mortgage is amortized more than 15 years (such as a 30 year fixed)!

  7. Joy Scoville says:

    I am on the Board of a Condo Complex in Utah. I have been trying to find out how to get our complex on the approved list for days now. I even called the Denver office of FHA to get instructions and they did’t have the answer. They said I should talk to a mortgage underwriter. How are we to get approved if no one can tell us what we need to do to make it happen? Joy

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