FHA Approved Condos | 2020

FHA loans are a great way to purchase a new condo with a small down payment, or refinance a condo will a small amount of equity.  FHA approved condos contain a few key characteristics that make FHA condo loans unique to other mortgage programs.

What are FHA approved condo projects?

Federal Housing Authority insures mortgages up to 30 years in length to purchase or refinance a single unit in an FHA-approved condo complex.  For a condo to be approved for an FHA loan, it must first meet guidelines for HUD approved condos.  Once a complex is approved, it’s residential units are available for FHA financing.

What are the FHA condo approval guidelines?

  • Condominium complex must contain 2 units or more
  • Less than 25 percent of the total complex or unit square footage may be used for nonresidential purposes (exceptions up to 50% may be allowed)
  • No more than 10% of condo complex’s units can be owned by one party
  • No more than 15% of condo complex’s combined HOA dues can be delinquent
  • At least 50% of the total complex units must be owner occupied, or under contract to sell to owner occupants
  • Timeshares and condo projects managed as hotels or motels are also ineligible, even if the units are individually owned.
  • Condo building configuration can be detached, semi-detached, row house, mid-rise or high-rise.
  • All condo units must meet state law requirements for liability insurance, hazard insurance, flood insurance, as determined by HUD
  • Condo project finance documents are reviewed including budget, balance sheet, income and expenses.
  • FHA approved condo complexes must be re-certified every two years for HUD compliance

How do you know if a condo is FHA approved?

HUD maintains a list of approved FHA condos around the country. If the subject property isn’t on the HUD FHA approved condo list, it’s still possible to get an mortgage approval if the lender does a little more legwork.  The lender, realtor or HOA can initiate application for FHA condo approval for the entire project through the “HUD Review and Approval Process” (HRAP) or the lender can attempt a “Site Condo” approval through the “Direct Endorsement Lender Review and Approval Process” (DELRAP).

You can lookup HUD approved condos for all 50 states through the links below.

FHA Approved Condos

Alabama FHA Approved CondosAlaska FHA Approved Condos
Arkansas FHA Approved CondosArizona FHA Approved Condos
California FHA Approved CondosColorado FHA Approved Condos
Connecticut FHA Approved CondosDelaware FHA Approved Condos
Florida FHA Approved CondosGeorgia FHA Approved Condos
Hawaii FHA Approved CondosIdaho FHA Approved Condos
Illinois FHA Approved CondosIndiana FHA Approved Condos
Iowa FHA Approved CondosKansas FHA Approved Condos
Kentucky FHA Approved CondosLouisiana FHA Approved Condos
Maine FHA Approved CondosMassachusetts FHA Approved Condos
Maryland FHA Approved CondosMichigan FHA Approved Condos
Minnesota FHA Approved CondosMississippi FHA Approved Condos
Missouri FHA Approved CondosMontana FHA Approved Condos
Nebraska FHA Approved CondosNevada FHA Approved Condos
New Hampshire FHA Approved CondosNew Jersey FHA Approved Condos
New Mexico FHA Approved CondosNew York FHA Approved Condos
North Carolina FHA Approved CondosNorth Dakota FHA Approved Condos
Ohio FHA Approved CondosOklahoma FHA Approved Condos
Oregon FHA Approved CondosPennsylvania FHA Approved Condos
Rhode Island FHA Approved CondosSouth Carolina FHA Approved Condos
South Dakota FHA Approved CondosTennessee FHA Approved Condos
Texas FHA Approved CondosUtah FHA Approved Condos
Vermont FHA Approved CondosVirginia FHA Approved Condos
Washington FHA Approved CondosWest Virginia FHA Approved Condos
Wisconsin FHA Approved CondosWyoming FHA Approved Condos

Mortgage Debt-to-Income Ratio – Conventional, FHA, VA, USDA Loan DTI

DTI Ratio

The Debt-to-Income Ratio, also known as “DTI Ratio”, are simply a couple of percentage representing applicant debt compared to their total income. Lenders use mortgage debt-to-income ratio percentages to evaluate a borrowers ability to repay them as agreed. Maximum debt-to-income ratios may vary based upon the mortgage program and the lender. Read More

Mortgage LTV Ratio: Loan-to-Value

LTV Ratio

The Loan-to-Value Ratio (LTV) is a percentage used to describe a loan amount compared to a property valuation. Lenders often use LTV Ratios to determine evaluate mortgage risk, determine applicant approval, and if they’ll be required to carry mortgage insurance. In general, higher LTV ratios represent increased risk to the lender. Therefore, high LTV mortgage loans are usually required to carry mortgage insurance. The LTV ratio is contingent on a property’s appraised value, as determined by the lender and mortgage program.

How is Mortgage LTV Calculated?

Loan-to-Value is calculated several ways, depending on the purpose of the mortgage. For a home purchase loan, the LTV is calculated based upon the sales price. For a refinance, the LTV is calculated based upon the appraised value of the home. The LTV ratio for either method is determined by dividing the loan amount by either the purchase price or total appraised value of the subject property.

Loan-to-Value Calculation

Example: Let’s assume you want to purchase a home that has an appraised value of $100,000. If you have $20,000 available for a down payment, then you’ll need to borrow another $80,000, or 80% of the purchase price.  Therefore, your ‘Loan-to-Value’ is 80%.

Conventional LTV Ratio Limits: Home Purchase

Loan to ValueMaximum Conventional LTV Ratios vary based upon several factors including mortgage type, loan purpose and the number of units in a property. Loan-to-value determines mortgage approval decisions within conventional loan requirements, and also if a borrower is required to carry Private Mortgage Insurance (PMI).

Conventional loans had maximum LTV limits of 80% historically, but that’s all changed.  These days, applicants can get conventional loans with LTV ratios of up to 97%.

Residence UsageFixed-Rate Mortgage (FRM)Adjustable-Rate Mortgage (ARM)
1 Unit Primary97% LTV90% LTV
2 Units Primary85% LTV75% LTV
3 Units Primary75% LTV65% LTV
4 Units Primary75% LTV65% LTV
1 Unit Second Home90% LTV80% LTV
1 Unit Investment85% LTV75% LTV
2 Units Investment75% LTV65% LTV
3 Units Investment75% LTV65% LTV
4 Units Investment75% LTV65% LTV

Conventional LTV Limits: Rate-Term Refinance

Rate-Term Refinance is considered any refinance where the borrower doesn’t get cash back.  These no-cash-out refinance options are used to lower a homeowner’s payments and interest rate. Rate-term refinance loans usually allow higher loan-to-values than for borrowers trying to take cash out.

Residence UsageFixed-Rate Mortgage (FRM)Adjustable-Rate Mortgage (ARM)
1 Unit Primary97% LTV90% LTV
2 Units Primary85% LTV75% LTV
3 Units Primary75% LTV65% LTV
4 Units Primary75% LTV65% LTV
1 Unit Second Home90% LTV80% LTV
1 Unit Investment75% LTV65% LTV
2 Units Investment75% LTV65% LTV
3 Units Investment75% LTV65% LTV
4 Units Investment75% LTV65% LTV

Conventional LTV Limits: Cash-Out Refinance

Cash-Out Refinance loans are used when a borrower has equity in a property they want to turn into liquid cash.  Because these loans often increase lender risk, they generally employ stricter LTV ratio requirements than no-cash-out refinance loans.

Residence UsageFixed-Rate Mortgage (FRM)Adjustable-Rate Mortgage (ARM)
1 Unit Primary80% LTV75% LTV
2 Units Primary75% LTV65% LTV
3 Units Primary75% LTV65% LTV
4 Units Primary75% LTV65% LTV
1 Unit Second Home75% LTV65% LTV
1 Unit Investment75% LTV65% LTV
2 Units Investment70% LTV60% LTV
3 Units Investment70% LTV60% LTV
4 Units Investment70% LTV60% LTV

FHA LTV Limits: Purchase or Refinance

FHA loans allow higher LTV ratios than most mortgage programs. Therefore, they’re considered a low down payment mortgage.  Loan-to-value ratios also affect how FHA loans are priced to the consumer, and if they’re required to carry FHA mortgage insurance.

Credit ScorePurchase Mortgage Refinance Mortgage
580+ FICO Score96.5% LTV85% LTV
Below 580 FICO Score90% LTV85% LTV

VA LTV Limits: Purchase or Refinance

While there’s no set maximum LTV for VA loans, it’s generally 100 percent.  VA loan-to-value may exceed 100 percent if the veteran chooses to finance the funding fee, discount points or energy efficient improvements.

 Purchase Mortgage Refinance Mortgage
All Credit Scores100% LTV + Points, Fees100% LTV + Points, Fees

USDA LTV Limits: Purchase or Streamline Refinance

USDA loans are a zero down payment mortgage program, which means they’re offered with LTV’s of 100%.  Technically, USDA loans are offered with a maximum loan-to-value of 102% because of the 2% “Guarantee Fee” may be rolled into the mortgage amount and paid over the duration of the loan.

 Purchase Mortgage Streamline Refinance
All Credit Scores102% LTV102% LTV

FHA Loans – 2020 FHA Loan Programs

FHA Loans

What is an FHA Loan?

An FHA loan is a mortgage program thats’s perfect for today’s first-time home buyers.  During the last decade, tightened housing regulations and poor wage growth have left many people feeling like owning a home is beyond their reach. More than ten million Americans can still hold on to their homeownership dreams thanks to flexible FHA loan requirements, which have helped over 40 million people achieve homeownership since 1934. Read More

FHA Loan Requirements Review | 2020

FHA Loan Requirements

FHA loans are a terrific option for home buyers with lower incomes, imperfect credit ratings or limited cash available for a down payment. In fact, FHA loan requirements feature a certain flexibility which makes them the only option available for millions of American mortgage applicants with “average” qualifications. That’s why FHA loans jumped in popularity after the 2008 financial crisis when subprime mortgage options were eliminated. Read More

Ups and Downs: 6 Years of FHA Mortgage Insurance Volatility

History of FHA Mortgage Insurance

FHA mortgage insurance rates have just been reduced in an unexpected move that offers the housing market a much needed boost. This .5% across the board MIP reduction will help more home shoppers become homeowners in 2015 and also reduce costs for thousands of borrowers looking to refinance. Read More

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