The FHA Condo Certification Problem That Never Goes Away
If you spend any time on Reddit or X reading about HOA or condo financing issues, you’ll notice the same story pop up every few weeks—sometimes even more often.
“Our HOA didn’t renew its FHA approval, and our buyer had to back out at the last minute.”
“My community was FHA certified when I purchased, but the Board never renewed it—or told anyone.”
“My elderly mother wants to stay in her condo, but it’s not FHA certified, so she can’t get the reverse mortgage she and my dad planned for.”
It’s a more common (and costly) problem than most people realize. And it can quietly derail home sales, refinancing plans, or retirement goals overnight.
In the past, many boards shrugged it off. Homes were selling fast, and buyers had plenty of conventional loan options, so FHA approval didn’t seem important. But times have changed.
Between rising mortgage rates, tightening Fannie Mae (FNMA) project standards, skyrocketing insurance costs, and new mandatory structural inspection requirements, many borrowers are suddenly finding themselves without viable financing options.
For years, FNMA’s “limited review” program made condo loans relatively easy for qualified borrowers. Now, with the introduction of stricter condo guidelines—and thousands of projects landing on Fannie Mae’s ineligible (“blacklist”) list—more and more buyers are looking for a backup plan.
That’s where FHA comes in. FHA loans often carry slightly lower interest rates than conventional loans, though the required mortgage insurance can make the monthly payment a bit higher. Still, if FNMA financing isn’t available and the community isn’t FHA approved, borrowers are left with only Non-QM mortgages—loans that typically carry interest rates at least a full percentage point higher.
Imagine you could buy a condo with an FHA loan at 6%, but since your community isn’t approved, you’re forced into a Non-QM loan at 7% or higher.
When that happens, you can count on frustration. Deals fall through, buyers walk away, or they demand price reductions to offset higher borrowing costs—lowering property values for everyone in the community.
All of this reinforces a simple truth: when communities ignore or delay FHA renewal, it rarely feels urgent until it suddenly becomes everyone’s problem. What seems like one buyer’s issue can quickly ripple across the entire community, affecting resale values, appraisal comparisons, and even future financing options. The financial impact might not show up right away, but when it does, it’s usually too late to fix in time.
