Learn Everything You Need to Know About FHA-Approved Condos

What you should know about the FHA condominium approval process

If you want to receive an FHA loan on a condo that isn’t currently FHA approved, the unit must go through an approval process before applying for your loan.

 

To begin, condo buildings or individual units must go through either the HUD Review and Approval Process (HRAP) or a Direct Endorsement Lender Review and Approval Process (DELARAP) (DELRAP).

After the necessary paperwork is completed, the FHA must appraise the building or unit to ensure it meets the requirements for approval.

The entire process can take two to four weeks, depending on a few factors:

  • The age of the building, as older buildings can take longer to approve.
  • FHA’s current caseload
  • How quickly the FHA receives the documents
  • How many regulations the building or condominium satisfies

FHA condo approval criteria

Here are a few critical conditions for an FHA-approved condo building:

 
  • In buildings with ten or more units, FHA can cover up to 10% of the units.
  • If the building has fewer than ten units, FHA loans are only available for two of them.
  • At least half of the units must be owned rather than rented.
  • The condo must have the necessary insurance and hold at least 10% of the Homeowners Association (HOA) budget in cash.
  • At least 85 percent of the units must be current on their condo fees.
  • A maximum of 35% of the property may be used for commercial purposes.
  • Every three years, the building must be recertified to ensure that it continues to meet these requirements.