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FHA Loans for Condominiums

FHA home loans aren’t just for traditional suburban homes; there are a wide range of choices for buyers interested in something outside a typical neighborhood. One of those options is an FHA condominium loan. The FHA guarantees home loans for proposed and under construction condo projects as well as existing condo units. The FHA can also approve mortgages for conversion projects where a property is renovated and converted into a condominium.

FHA loan applicants seeking a condo loan have a few restrictions those searching for more traditional homes don’t have to worry about. For example, a traditional home buyer looking at houses in the suburbs would never need to question whether the property is considered primarily residential.

An FHA borrower who wants to buy a condominium must know whether the property up for sale is primarily intended as a residence property. This usually affects those who are interested in proposed or under-construction projects.

A condo buyer must also know a few other details. The FHA will not approve condo loans for time sharing or “segmented ownership” type condo projects. Condo hotels, also known in some quarters as condotels, are not eligible for an FHA condo mortgage, nor are houseboats or condos where there is more than a single residence within the individual condo units.

The FHA condo loan for approved properties can feature terms of up to 30 years. Approved condo properties have at least two units. They are permitted to be detached or semi-detached. Walk-ups and rowhouses are also approved.

At one time, the FHA required approved condominium properties to have at least four units, but with the passage of the Housing and Economic Recovery Act of 2008, changes were made to the program including lowering the mimimum number of units to two. The changes affect all FHA condo loan case numbers assigned on December 7, 2009 and beyond except for specific exceptions approved by the FHA.

Those who purchase condos with an FHA mortgage are eligible to apply for FHA streamline refinancing the same as traditional home owners, and typical FHA refinance loan underwriting rules apply to borrowers who later decide to file paperwork for cash-out refinancing. The status of an FHA condo loan in this respect is no different than if the buyer had a “traditional” FHA mortgage.

Joe Wallace - Staff Writer

By Joe Wallace

January 3, 2011

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for for (8) years and is currently the Associate Editor for

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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