The Guidelines for FHA Condo Approval 2016

Although there are many FHA Condo Approval Guidelines, these are the basics that will determine eligibility.  These requirements are taken directly from the FHA guidelines. 


  • Right of First Refusal in Declarations can not violate Discriminatory Conduct under the Fair Housing Act Regulation 24 CFR part 100
  • Commercial Space – No more than 50% of property can be used as commercial space.
  • Delinquent Dues:  No more than 15% of units can be arrear more than 60 days.
  • At least 50% of total units must be sold prior to endorsement
  • Any investor/entity (single or multiple owner entities) may own up to 50 percent of the total units IF at least 50 percent of the total units in the complex are owner occupied as principal residences.  (The previous limit was 10%)
  • No more than 50% of the units can be Rentals / Investor owned.
  • No more than 50% concentration of FHA Loans
  • Sufficient Budget required – at least 10% of budgeted income must go toward a reserve account.
  • Insurance Coverage:
    • Master or Blanket – Must be 100% of replacement cost of condominium, not including foundation or land.
    • General Liability – insuring all common elements,  and public ways
    • Fidelity Bond (aka Employee Dishonesty or Crime Insurance) – for communities with 20+ units.  Covers the Board of Directors and Employees that handle association funds.  Must be 3 months aggregate assessments on all units + Reserves.  Note: This type of insurance is different than D&O insurance.
    • Flood insurance – Only Required if located within 100 year flood plane.
These excerpts from the FHA Condo Approval Guidelines are for informational purposes.  If you have a specific question about your condominium community and its eligibility for FHA approval please contact us.

Required Documents

To see a list of required documents for FHA Condo Approval, click here.