Will FHA insure a unit in a condo project undergoing conversion that has not been completed yet?

A Condominium Project is considered newly converted if the Date of Conversion (the date the legal documents were recorded) is within 24 months of the time of Condominium Project submission.   Newly converted Condominium Projects can only be processed under the HUD Review and Approval Process (HRAP) option.
For Gut Rehabilitation (Gut Rehab) conversion Condominium Projects, the Mortgagee must comply with the FHA Condominium Project Approval Requirements and the New Construction standards (see Handbook 4000.1, Section II.A.8.i.iii - Required Documents for Maximum Financing).
The work/repairs for both the Gut-Rehab and Non-Gut Rehab must be completed and documented as follows:
  • For Gut-Rehabs, an engineering or architectural inspection, dated within 12 months, evidencing all rehabilitation work/repairs have been completed; and a Certificate of Occupancy or its equivalent must be provided.  
  • For Non-Gut Rehabs, evidence that all rehabilitation work/repairs have been completed.
For case numbers assigned October 15, 2019 and after, additional information regarding Gut Rehabilitation and Non-Gut Rehabilitation projects can be located in: Handbook 4000.1, Section II.C.2.d.ii. available at: 

For case numbers assigned prior to October 15, 2019, information is available in:
  • Mortgagee Letter (ML) 2011-22 Condominium Approval Process for Single Family Housing – Consolidation and Update of Approval Requirements and the attached Condominium Project Approval and Processing Guide provides the requirements and procedures for obtaining FHA condominium project approval.
  • ML 2012-18 Temporary Approval Provisions for FHA Condominium Project Approval provides temporary condominium project approval guideline changes to address current housing market conditions.
  • ML 2015-27 Additional Temporary Approval Provisions for FHA Condominium Project Approval
  • ML 2016-15 FHA Condominium Project Approval – Owner Occupancy Requirements modifies the Condominium Project Approval and Processing Guide, attachment to ML 2011-22, in order to implement the Housing Opportunity Through Modernization Act of 2016 (HOTMA) requirements and establish the required owner-occupancy percentage that must be met for purposes of FHA project approval.
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:   
For more information regarding condominium projects refer 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-03886