The Single Unit Approval Process

Single Unit Approvals

On 10/15/2019 HUD officially implemented the Single Unit Approval process we’ve all been waiting for.  While many industry insiders released press releases and articles praising the new program, it’s not nearly as simple or as easy as people hoped.  Our team is fielding multiple phone calls and emails daily regarding the process.

To help clear up the situation, this is what you need to know:

  • The new FHA “Single Unit” Approval program was implemented on 10/15/2019.
  • This is an entirely new program – and NOT the “Spot Approval” program favored by lenders in the past.
  • The SUA program will allow individual units to obtain FHA Loans without full project approval.  This includes forward mortgages, refinances, and reverse mortgages.
  • The SUA process must be handled by a lender that employs Direct Endorsement Underwriters.  Condominium Associations, Realtors, and Lenders without DE Underwriters are NOT allowed to apply directly for a SUA.
  • The Condominium Association will need to meet guidelines set forth by HUD.
  • The SUA guidelines exclude many standards set forth in the full project approval; SUAs may be used in some communities that do not qualify for full project approval due to the more lax regulations.
  • The Management Company/Board of Directors must complete a questionnaire and supply necessary documents.  This process cannot be completed without participation from either the Management Company and/or Board of Directors.
  • Upon receiving conditional approval from HUD, the participating lender is required to confirm that the association qualifies for Single Unit Approval before issuing the loan.
  • Although most SUA case files are currently being reviewed HUD, the future liability and burden of responsibility remains with the authorizing lender.  For this reason alone, most lenders do not participate in the Single Unit approval process.


Simply put, the Single Unit Approval process may be a shortcut if you are using a Direct Endorsement lender.  If you would like more options, full project approval is the best option.

Also, it is important to know that there is no streamlined process for obtaining a SUA for additional units in the same community.  The entire process must be repeated with a complete set of documents and a new questionnaire.

SUA Basic Requirements:

NOTE:  The Condominium Project must also meet ALL SUA eligibility requirements.  The list below are specific nuances to the SUA process vs the Full Project Approval.

  • Condominium Project contains a minimum of five units
  • Manufactured homes are not eligible.
  • 10 units +:  maximum FHA Concentration rate of 10%
  • Less than 10 units: maximum of (2) units may be FHA Insured.
  • Commercial Space:  maximum 35% (no exceptions)
  • Owner Occupancy:  minimum of 50% owner occupied (no exceptions)
  • Condominium Project is not currently “Approved” or been previously rejected for an adverse determination.
  • Condominium Project meets all FHA Property Standards.


Benefits of Full Project Certification:

  • The entire Condominium Association is FHA Approved for (3) years.
  • There is a “Streamlined” Renewal process
  • Community Managers will only need to visit the issue once every (3) years. With the SUA process, it is likely to be a constant and repetitive time burden.
  • Units within Condominium Projects with Full Project Approval can be marketed as “FHA Approved”.
  • HUD authorizes the Approval and the lender does not have to take on unnecessary liabilities.


How we can help with the Single Unit Approval Process:

  • As a professional service to lenders, banks, mortgage companies, and brokers, FHA Review is offering an FHA Single-Unit Approval Case Binder.  This custom report will allow lenders to prequalify a unit before going through the appraisal, and inspection processes.

Press Release issued by HUD - April 14, 2019

FHA ISSUES NEW CONDOMINIUM APPROVAL RULE Comprehensive policy revisions include ability to approve individual units in nonapproved condo projects

WASHINGTON – In an effort to promote affordable and sustainable homeownership, especially among credit-worthy first-time buyers, the Federal Housing Administration (FHA) today published a long-awaited final regulation, and policy implementation guidance, which establish a new condominium approval process.

Designed to be flexible and responsive to market conditions, FHA’s new condo rule and the new Condominium Project Approval section of the Single Family Housing Policy Handbook, provide a comprehensive revision to FHA condominium project approval policy.  In particular, the new policy will allow certain individual condominium units to be eligible for FHA mortgage insurance even if the condominium project is not FHA approved. The polices become effective October 15, 2019. Read FHA’s new condominium approval regulation.

FHA’s new condominium policy is part of a broader Administration objective to reduce regulatory barriers that currently restrict affordable homeownership opportunities. FHA’s new rule:

  • Introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA-insured financing;
  • Extends the recertification requirement for approved condominium projects from two to three years;
  • Allows more mixed-use projects to be eligible for FHA insurance.

“Condominiums have increasingly become a source of affordable, sustainable homeownership for many families and it’s critical that FHA be there to help them,” said U.S. Housing and Urban Development Secretary Ben Carson. “Today, we take an important step to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age-in-place.”

HUD Acting Deputy Secretary and FHA Commissioner Brian Montgomery added, “Today we are making certain FHA responds to what the market is telling us. This new rule allows FHA to meet its core mission to support eligible borrowers who are ready for homeownership and are most likely to enter the market with the purchase of a condominium.”

The vast majority (84 percent) of FHA-insured condo buyers have never owned a home before. While there are more than 150,000 condominium projects in the U.S., only 6.5 percent are approved to participate in FHA’s mortgage insurance programs.  As a result of FHA’s new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually.

Single Family Policy Handbook Guidance

FHA’s new Single Family Handbook sections published today provide the additional requirements that lenders and other industry participants need in order to implement FHA’s new policy, including requirements for single-unit approvals, minimum owner occupancy requirements, and commercial/non-residential space limits. Read FHA’s changes to its Single Family Handbook.

Single-Unit Approvals

As of October 15, FHA will insure mortgages for selected condominium units in projects that are not currently approved.  An individual unit may be eligible for Single-Unit Approval under the following conditions:

  • The individual condominium unit is located in a completed project that is not approved;
  • For condominium projects with 10 or more units, no more than 10 percent of individual condo units can be FHA-insured; and projects with fewer than 10 units may have no more than two FHA-insured units.

Minimum Owner-Occupancy Requirements

FHA will require that approved condominium projects have a minimum of 50 percent of the units occupied by owners for most projects.

FHA Insurance Concentration in Condominium Projects

FHA will only insure up to 50 percent of the total number of units in an approved condominium project.

Commercial/Nonresidential Space Limits

FHA will require that the commercial/non-residential space within an approved condominium project not exceed 35 percent of the project’s total floor area.


HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.
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