How will a lender know when the maximum FHA condo project concentration has been met?

FHA will not insure any new mortgages in an approved project if 50% or more of the units are already FHA insured. New case numbers will not be issued once the 50% concentration level (plus a small tolerance for some fall-out) has been reached. The FHA concentration calculation is:
• Based on new FHA case numbers assigned and active encumbered FHA insured loans in a project divided by the number of declared units.
• Displayed for each project on the approved condo listing, which can be found on both FHA Connection and at 

For calculating concentration percentage:
• Projects consisting of three units or less must have no more than one unit encumbered with FHA insurance.
• Projects consisting of four or more units must have no more than 50% of the total units encumbered with FHA insurance.
• Calculation of the concentration percentage in a project declared with legal phases must follow the same methodology as owner-occupancy.

The jurisdictional Homeownership Center (HOC) may grant an exception, but no exceptions can be processed under the Direct Endorsement Lender Review and Approval Process (DELRAP). The required documents and a cover letter must be submitted to the HOC for review. The concentration percentage may be increased if the project meets all of the requirements for project approval and additional requirements (see the Condominium Project Approval and Processing Guide - Attachment to Mortgagee Letter 2011-22). Proposed, under construction (including existing <12 months old), and gut-rehabilitation condo conversions are not eligible for the exception.

For more information regarding condominium projects refer to:

• FHA Condominium Mortgage Insurance Page

• Mortgagee Letter 2011-22 and Attachment(s)

• Search for approved condominiums

• To identify the jurisdictional HOC for the state where the condominium project is located go to

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-03236