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Do FHA Mortgage Lenders Lend on Condos?

Yes, FHA mortgage lenders will finance FHA Approved Condominium under the 203b program, FHA mortgage lenders provide insurance on FHA mortgage loans secured by one-family condominium Units located in FHA-Approved Condominium Projects and in Units located in Condominium Projects not approved by FHA. 
FHA Mortgage loans are made by FHA-approved mortgage lenders, such as a mortgage company, bank, or credit union, and is insured by FHA which is part of HUD.   Any creditworthy, prospective qualified FHA Mortgage applicant who meets FHA underwriting criteria is eligible for an FHA-insured mortgage on a condominium Unit.   
To locate an FHA-approved Condo List Check This Link! 



FHA mortgage lenders published its FHA Condominium Project Approval Final Rule in the Federal Register (Docket No. FR-5715-F-02). Additionally, it added two new sections—Section II.A.8.p “Condominiums” and Section II.C “Condominium Project Approval”—and incorporated new FHA approved condominium project approval policy guidance in other sections of its Single Family Housing Policy Handbook 4000.1 (SF Handbook). The effective date for both the Final Rule and SF Handbook updates is October 15, 2019.

Section 203 (b) of the National Housing Act provides authority to insure any mortgage covering a one-family unit in a project coupled with an undivided interest in the common areas and facilities which serve the project. FHA insures FHA approved condominium loans for up to 30-year terms to purchase or refinance a unit in an FHA-approved condominium project or in a project that is not FHA-approved but meets the Single-Unit Approval requirements

For project approval or recertification, eligible projects must be complete and exist in full compliance with applicable state law requirements including good standing with the state, and with all other applicable laws and regulations. The condominium project also must meet the approval requirements established by HUD through the SF Handbook 4000.1, including insurance coverage, financial condition, nature of title, the existence of any pending legal action or physical property condition, and other factors that may affect the viability or marketability of the project or its units.

To be eligible for Single-Unit Approval, the unit must be located in a project that is not FHA-approved, that is complete and ready for occupancy, has at least five dwelling units and it is not a manufactured home. The project must also meet a subset of the requirements set forth for project approval, including FHA insurance concentration, owner-occupancy percentage, and financial condition of the project.

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


US Mortgage Lenders has an extensive lender network that allows us to provide unique and mortgage solutions. Contact US for the most update information on terms and conditions. All Information on this site Is for example, hypothetical purposes and should NOT be relied on for decision making.
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