If you’re a first-time homebuyer or shopping with a limited budget, both FHA loans and condominiums offer a more affordable path to homeownership.
FHA loans make qualifying easier with a smaller down payment and lower credit score, while condos tend to cost less than single-family homes in the same area.
But if you plan to combine the two—using an FHA loan to buy a condo—there are extra rules to navigate. Not all condos are eligible for FHA financing, and both the borrower and the property must meet certain criteria.
Key Takeaways
- FHA loans can be used to buy condos, but the condo community or unit must meet specific approval requirements.
- Spot approvals allow single-unit purchases in non-approved communities, but the HOA must still meet some minimum standards.
- Buyers must still qualify for an FHA loan with standard credit, down payment, and mortgage insurance requirements.
What Is an FHA-Approved Condo?
An FHA-approved condo is a unit located in a condominium community that meets specific standards set by the Federal Housing Administration. You can’t use an FHA loan to buy just any condo—the entire community or the individual unit must be approved for FHA financing.
FHA approval ensures the building is financially stable, properly insured, and in good physical condition. The approval process also reviews how many units are owner-occupied, how many carry FHA loans, and how the homeowners association (HOA) manages reserves and delinquencies.
Before 2019, only full condo projects could be FHA-approved. Now, the FHA allows single-unit (spot) approvals, making it easier to finance a condo purchase with an FHA loan.
FHA Condo Approval Requirements (2025)
To qualify for FHA financing, a condo project must meet certain criteria:
- The building must be complete (not under construction).
- At least 50% of units must be owner-occupied.
- In buildings with 10 or more units, up to 50% can have FHA loans.
- In smaller buildings (fewer than 10 units), only 2 units total can be FHA-financed.
- At least 85% of homeowners must be current on their HOA dues.
- The HOA must set aside at least 10% of its budget in reserves.
- No more than 35% of the property can be used for commercial space.
- The community must be recertified every 3 years.
FHA will also deny approval for communities that feel more like hotels (short-term rentals, extensive amenities) or are near undesirable locations like landfills or busy airports.
What Are Spot Approvals?
If a condo building isn’t FHA-approved, you may still qualify for a single-unit approval (commonly called a spot approval).
In this case, the individual unit is evaluated for FHA financing, though the community must still meet some baseline requirements:
- The project must have at least five units.
- The unit must be owner-occupied or intended to be.
- The unit must be ready for occupancy (not under construction).
- The unit must not be a manufactured home.
Spot approvals also require an FHA appraisal and documentation from the HOA. Many associations may decline to participate in this process, so working with a lender and agent familiar with FHA condo rules can be key.
FHA Condo Loan Requirements for Borrowers
If the condo unit qualifies, you still need to meet the standard FHA loan requirements as a borrower:
- Credit score: 580+ for 3.5% down, or 500–579 with 10% down, but lenders often require higher scores.
- Down payment: 3.5% minimum if you meet the credit score requirement.
- Debt-to-income (DTI) ratio: Up to 43% is preferred, but up to 56.9% may be allowed with strong credit or reserves.
- Occupancy: The condo must be your primary residence.
- Mortgage insurance: FHA loans require both an upfront mortgage insurance premium (1.75% of the loan amount) and an annual MIP.
FHA Condo Rules That Benefit Seniors
Rule changes in 2019 also made it easier for seniors to use FHA reverse mortgages (HECMs) in condo buildings. Seniors aged 62+ may now qualify for a reverse mortgage even if the entire condo project isn’t FHA-approved, provided their unit passes the spot approval process.
This makes it easier for retirees to access home equity and stay in condo communities previously off-limits for FHA financing.
FHA Section 234(c): A Program for Condo Buyers
FHA condo loans fall under a special FHA program called Section 234(c). It’s designed to promote affordable homeownership for low- and moderate-income borrowers buying a unit in a condo development.
Key highlights of the Section 234(c) program include:
- Buildings must have at least four units.
- Eligible buildings include townhomes, row houses, walk-ups, and elevator buildings.
- This program allows for 30-year fixed loans with the same credit, down payment, and MIP requirements as other FHA programs.
How to Find FHA-Approved Condos
To see whether a condo is FHA-approved:
- Use the HUD condo lookup tool: HUD FHA Condo Search.
- Ask the condo association or management company for the project’s FHA approval status or condo ID.
- Work with a real estate agent or lender experienced in FHA condo transactions.
Because the rules and requirements can be complex, having professionals guide you through the process can save time and reduce the chance of delays.
Down the Road: Refinancing Your Condo
If you plan to refinance your FHA condo loan later—whether to lower your interest rate, shorten your term, or remove mortgage insurance—your condo’s FHA status still matters.
FHA Refinance Options for Condo Owners
FHA offers several refinancing programs that condo owners can use, including:
- The FHA Streamline Refinance is a simplified refi option for current FHA borrowers. No income verification or appraisal is typically required, but your condo must still meet FHA eligibility requirements.
- The FHA Cash-Out Refinance allows you to tap your home equity but requires full documentation, an appraisal, and continued FHA condo eligibility.
- The FHA Simple Refinance is a standard rate-and-term refi option with full credit, income, and appraisal requirements.
How we source rates and rate trends
Rates based on market averages as of Dec 02, 2025.Product Rate APR 30-year Fixed Fha Purchase 5.58% 6.79% 30-year Fixed Fha Refinance 5.56% 6.77%
Will You Need to Recertify Your Condo?
Yes, whether your condo was part of an FHA-approved project or approved via a spot approval, its status must still be current at the time of refinance.
- Full project approvals must be recertified every 3 years.
- Spot approvals may require updated documentation from the HOA.
Working with a lender who understands FHA condo refinances can help ensure a smooth process and avoid surprises.
Should You Buy a Condo with an FHA Loan?
Should You Buy a Condo?
Condos can be a great fit for buyers who want the benefits of homeownership without the maintenance and price tag of a standalone home. They’re typically more affordable than single-family homes in the same area, making them a good option for first-time buyers or budget-conscious shoppers.
Many condos offer low-maintenance living, with exterior upkeep, landscaping, and common area repairs handled by the homeowners association (HOA). You still build equity and experience the pride of ownership—but with fewer chores.
That said, condos aren’t for everyone. You’ll have less privacy than a detached home, and you’ll likely have to follow HOA rules on things like exterior appearance, renovations, and pet ownership.
You’ll also need to factor monthly HOA fees into your budget. Appreciation rates can sometimes trail behind those of single-family homes, especially in markets with a lot of new condo construction.
Should You Use an FHA Loan?
If you have a lower credit score or limited down payment savings, the FHA offers some of the most accessible financing available. While conventional loans technically allow for just 3% down, that option is often reserved for borrowers with excellent credit (typically 740+).
If your credit score is below 680, you’ll likely face much higher down payment requirements and interest rates with a conventional loan. FHA, by contrast, allows you to buy with as little as 3.5% down and a credit score as low as 580 (subject to lender overlays).
That flexibility makes FHA an excellent match for condo buyers early in their financial journey. Just make sure the condo is eligible—or can be spot-approved—and you’re on your way to affordable homeownership.
Related: Credit Score Needed to Refinance Your Home
Final Thoughts
FHA condo loans open the door to homeownership for more buyers, especially those who might not qualify for conventional financing. But the extra layer of rules around condo approval means you’ll need to do a bit more upfront homework.
Start by checking the approval status of the condo community or individual unit. Then, make sure you meet FHA borrower requirements—and work with a team that understands how to navigate spot approvals if needed.
Whether you’re buying your first condo or looking for an affordable option in retirement, FHA loans offer a flexible and accessible path forward.
