The Secret to Buying a Condo with an FHA Loan

Condos offer an attractive path to homeownership — especially for first-time buyers and those looking for low-maintenance living. And if you're considering using an FHA Loan to finance your purchase, you're already on the right track. FHA Loans are popular among buyers with lower credit scores or smaller down payments, but buying a condo with one comes with unique rules and challenges.

This guide explains how FHA condo financing works, the hidden details many buyers miss, and the smart strategies to successfully navigate the process.

What Is an FHA Loan?

An FHA Loan is a mortgage backed by the Federal Housing Administration. It’s designed to make homeownership more accessible for those who might not qualify for a conventional loan. Benefits include:

• Down payments as low as 5%
• More flexible credit requirements (as low as a 580 credit score)
• Competitive interest rates

However, when it comes to condos, FHA Loans have extra layers of approval. Let’s look at what makes condos different.

Why Buying a Condo Is Different

A condominium isn’t just a type of building — it’s a form of ownership. When you buy a condo, you own your individual unit, but you also share ownership of common areas like hallways, pools, and landscaping with other unit owners through a homeowners association (HOA).

Because of this shared ownership structure, the FHA doesn’t just evaluate your financial standing — they also assess the entire condo project before approving your loan.

The Secret: The Condo Must Be FHA-Approved

Here’s the biggest thing most people don’t realize: Not every condo is eligible for FHA financing.

The condo development must be listed on the FHA’s Approved Condominium List to use an FHA Loan. If the project isn’t approved, you won’t be able to use FHA financing — unless you can qualify for something called a Single-Unit Approval (SUA) (more on that below).

How to Check If a Condo Is FHA-Approved

The FHA maintains a searchable database of approved condominiums. You can find it on the HUD.gov website. Look up the condo project by name, city, or ZIP code. If it’s there, you're in business.

But what if it’s not listed?

Option 1: Look for an Already Approved Condo

The simplest route is to shop for condos that are already FHA-approved. Your real estate agent can help filter listings to only show approved properties. This saves time, reduces paperwork, and improves your chances of a smooth loan process.

Option 2: Use FHA’s Single-Unit Approval (SUA)

Here’s where the secret workaround comes in.

In 2019, the FHA introduced a Single-Unit Approval (SUA) option. This lets you get an FHA Loan for a single condo unit in a project that’s not fully FHA-approved — if it meets specific criteria.

SUA Eligibility Requirements:

• The condo must be in a development with at least five units.
• No more than 10% of the units can have FHA Loans (for developments with more than 10 units).
• At least 50% of units must be owner-occupied.
• The HOA must be in good financial standing with no pending litigation.
• The unit must be completed and ready for occupancy.

The process does take more paperwork, and not all lenders are experienced with SUA requests — so make sure you work with a lender familiar with FHA condo rules.

FHA Condo Loan Requirements for Buyers

Even if the condo project is approved (or qualifies for SUA), you still need to meet basic FHA Loan qualifications:

• Minimum credit score of 580 for 3.5% down payment
• Debt-to-income ratio (DTI) generally under 43%
• Steady income and employment history
• Mortgage insurance premiums (MIP) required upfront and monthly.

You’ll also need to factor in HOA dues when calculating how much you can afford. These fees count toward your total monthly debt obligations.

Common Pitfalls to Avoid

1. Assuming All Condos Are FHA-Eligible

Just because a property is listed as a condo doesn’t mean it’s eligible. Always confirm FHA approval status upfront.

2. Not Factoring in HOA Dues

HOA fees can range from $100 to $1,000+ per month. These must be included in your debt calculations and can affect how much loan you qualify for.

3. Choosing a Lender Unfamiliar with FHA Condo Loans

Not all lenders work regularly with FHA condo transactions or SUAs. Choose a lender like DSLD Mortgage that understands the FHA process inside and out.

4. Delays in Condo Project Approval

If you're trying to get the whole project approved — or go through a Single-Unit Approval — expect delays. Paperwork, inspections, and FHA reviews can take several weeks.

Pro Tips for Buying a Condo with an FHA Loan

✅ Work with an FHA-Experienced Agent

Find a real estate agent who understands FHA Loan requirements and can guide you toward eligible properties.

✅ Get Pre-Approved Early

Knowing your budget — and whether you qualify for FHA financing—makes the home search more focused and productive.

✅ Don’t Skip the Fine Print

Review the HOA rules, fees, and financials. The health of the HOA can impact both FHA eligibility and your experience as a homeowner.

✅ Consider Resale Value

Condos in FHA-approved projects often have better resale potential since they’re available to a wider pool of buyers.

Final Thoughts

Buying a condo with an FHA Loan is absolutely possible — but it requires a little extra homework. The key secret is this: focus on FHA-approved condos or use the Single-Unit Approval if necessary.

With the right strategy and a knowledgeable lending partner, you can navigate the FHA process and get the keys to your perfect condo.