What are the general FHA eligibility requirements for condominium projects?

All eligibility requirements are defined in the current condominium project approval guidance.


  • The project is declared and exists in compliance with State, local and other laws and regulations.
  • Minimum units: 2
  • Insurance: Hazard, liability, flood, fidelity & other insurance required, as applicable
  • Right of First Refusal: Permitted unless it violates discrimination laws
  • Mixed Use/Commercial Space: Up to 25% (>25% case-by-case exception)
  • Investor Ownership: Up to 50% on existing project >12 months old, or non-gut rehab conversion.
  • Homeowners Association (HOA) Dues: No more than 15% of the total units may be in arrears (more than 60 days past due)
  • Pre-sales: 30% must be sold prior to endorsement (not applicable to existing projects or non-gut rehab conversions)
  • Owner Occupancy:

Project Status

Owner Occupancy Requirement

Existing (projects fully completed and over one year old of non-gut rehab conversions)

At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the unit(s).
The owner occupancy requirements may be lowered to as low as 35 percent if the project meets the conditions outlined below under Conditions to Lower Owner Occupancy Percentage for Existing Projects.

Proposed, Under Construction (including existing projects less than 12 months old or gut rehab conversions

FHA will allow a minimum owner-occupancy percentage of 30 percent of the declared units.  Legally phased projects must meet 30 percent presale and 30 percent owner-occupancy requirements. (Refer to table in ML 2012-18)

  • Legal Phasing: Permitted subject to requirements
  • FHA Concentration: 50% subject to conditions
  • Financial/Budget Review: Review of the HOA budget is required
  • Additional requirements may apply (e.g., new construction and conversion projects) 

Conditions to Lower Owner Occupancy Percentage for Existing Projects
Existing projects (greater than 12 months old) with an owner occupancy percentage of at least 35 percent and less than 50 percent are eligible for approval under the following circumstances and subject to the following conditions:

  • Applications must be submitted for processing and review under the HUD Review and Approval Process (HRAP) option.
  • Financial documents must provide for funding of replacement reserves representing at least 20 percent of the budget; and
  • No more than 10 percent of the total units can be in arrears (more than 60 days past due) on their condominium association fee payments; and
  • Three years of acceptable financial documents must be provided.
  • NOTE:  See Sections 2.1.5 and 2.1.6 of the Condominium Project Approval and Processing Guide for additional information regarding condominium association fee payments and acceptable financial documents.  


  • Condominium hotels or condotels;
  • Timeshares or segmented ownership projects;
  • Houseboat projects;
  • Multi-dwelling unit condos (more than one dwelling per condo unit);
  • All projects not used primarily as residential;
  • Projects located in designated Coastal Barriers.

For more information regarding condominium projects refer to:

  • The FHA Condominium Mortgage Insurance page at https://www.hud.gov/program_offices/housing/sfh/ins/sfh_ins_condominiums
  • Mortgagee Letter (ML) 2011-22 and Condominium Project Approval and Processing Guide
  • ML 2012-18 Temporary Approval Provisions for FHA Condominium Project Approval
  • ML 2015-27 Additional Temporary Approval Provisions for FHA Condominium Project Approval  
  • ML 2016-15 FHA Condominium Project Approval – Owner Occupancy Requirements 
  • Note:  The Temporary Provisions in ML 12-18 and ML 15-27, as modified by ML 2016-15, are effective until HUD publishes and implements the Final Rule of Condominium Project Approval through publication of the Condominium Project Approval Section of HUD Handbook 4000.1, as extended by ML 2017-13.

Mortgagee Letters are available at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee

To search for approved condominiums please visit https://entp.hud.gov/idapp/html/condlook.cfm

To identify the jurisdictional Homeownership Center for the state where the condominium project is located you may go to https://www.hud.gov/program_offices/housing/sfh/sfhhocs

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.

Topic Number: KA-02374