Are Reserve Studies required for all existing as well as new construction condominiums?

Reserve Studies are not automatically required for project approval with the exception of non-gut and gut rehab conversions.

The HUD or lender reviewer must review the homeowners’ association financial documents for all projects to determine that the budget and operating results are sufficient and
- include allocations / line items to ensure sufficient funds are available to maintain and preserve all amenities and features unique to the condominium project; and
- provide for the funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10 percent of the budget; and
- provide adequate funding for insurance coverage and deductibles.

In cases where the budget documents do not meet these standards, a reserve study may be requested to assess the financial stability of the project. The reserve study cannot be more than 24 months old. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed.

FHA or the DELRAP lender may require submission of additional financial statements to complete the condominium project approval review.

For more information regarding condominium projects refer to:
  • The FHA Condominium Mortgage Insurance page at
  • Mortgagee Letter (ML) 11-22 and Condominium Project Approval and Processing Guide
  • ML 12-18 Temporary Approval Provisions for FHA Condominium Project Approval
  • ML 15-27 Additional Temporary Approval Provisions for FHA Condominium Project Approval  
  • ML 16-15 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

To search for approved condominiums please visit

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-02375