FHA-Approved Condos: A Buyer’s Guide

There’s a lot to love about condos: For starters, they’re usually less expensive than standalone single-family homes. Upkeep is easier, since they’re smaller — plus, condo fees pay for help with maintenance. And if your credit score needs a little work, you can buy a condo with a low-down-payment mortgage backed by the Federal Housing Administration.

The rules for buying a condo with an FHA loan have changed in recent years. Here are a few shortcuts to help you start your search for an FHA-approved condo.

» MORE: Learn the basics of FHA loans

What to know about FHA-approved condos

The FHA is part of the U.S. Department of Housing and Urban Development (HUD). FHA loans are often attractive to first-time home buyers since they offer low down payments coupled with more lenient credit score and debt-to-income requirements than conventional mortgages. Buyers can get an FHA-insured mortgage for several home types, including single-family homes, duplexes and multifamily homes, manufactured homes and — yes — condos.

» MORE: Condos, townhouses and co-ops: What’s the difference?

There are two paths to buying a condo with an FHA loan: buying in a complex where all units are FHA-approved, or seeking approval for a single unit.

Buying in an FHA-approved complex

This used to be the only way to buy an FHA-approved condo — but not anymore. Still, it’s the most straightforward for buyers, since the pre-work is already done for you.

When you buy a unit in an FHA-approved complex, the owners of the condominium development have already submitted all the necessary paperwork to the FHA. This shows the FHA that the community is safe and viable, from its insurance coverage to the physical condition of the buildings.

Side note: A complex could have been approved before, but then let its paperwork expire. If that happens, you’ll have to go through the single-unit approval method listed below.

Seeking single-unit approval

What if the condo you want to buy isn’t in an FHA-approved development? Good news: You can apply through your FHA-approved lender for single-unit approval. This is sometimes referred to as "spot approval” or “spot loans,” although that term is technically outdated. The FHA relaxed its rules in 2019 to make it easier to get a single unit approved.

To get single-unit approval, your lender works with the complex's management or condo owners association to file paperwork with the FHA. This shows that the development meets basic FHA standards, even if it doesn’t have official approval.

Single-unit approvals are awarded on a case-by-case basis. If you go this route, leave yourself some wiggle room in your homebuying timeline for extra paperwork and back-and-forth. And you’ll definitely want to work with a lender that’s familiar with the ins and outs of FHA loans.

» MORE: See NerdWallet’s best lenders for FHA loans