FHA Condo Approval Specialist: Can Our Condominium Get FHA Approved Before Construction?

Can Our Condominium Get FHA Approved Before Construction?

Can Our Condominium Get FHA Approved Before Construction?

fha condo approvalRecently, I received a call from a developer in California who asked me at what point during construction is a condominium eligible for an FHA condominium project approval.  She has a condominium approved for development by the city but ground had not been broken as of yet.  She said that she had spoken with other project consultants and FHA and had received conflicting information.

In speaking with FHA, she was told that proposed projects can be approved prior to construction and are approved at this stage quite often.  Projects do not need to be complete or even have phase completion to be approved.

In speaking with the other project consultants, she was told that the first phase of the project - or at least some units - must be completed in order to get approved with FHA.

I ran into a similar situation back in 2010 when I was working with the developer of a new condominium project.  Back then, I was told by FHA that it does allow project approval even before construction has begun and I have found this to be true in practice.

In addition, if the project is approved before construction, once they are built, completed units would have to be annexed to the project approval in FHA’s system before they are available for FHA unit financing.  Only those units that are noted in FHA’s system would be eligible for financing provided that all other requirements are met.

While the project may be eligible for approval, FHA loans are not available in the project until the loan-level requirements have been met.  Besides the project-level requirements FHA has for condominiums to get on its approved condominiums list, loan-level requirements must also be met when a borrower is applying for a loan.

A proposed new construction condominium project can meet the project-level requirements to get on the FHA Approved Condominiums List even before any of the units have been built.  But FHA will not allow unit financing until the completed units are annexed AND 30% of the units in the current legal phase have been sold or are pending sale and at least 50% of the sold units are owner-occupied.  [There are other loan-level requirements.]

The developer was thrilled to learn of this and said to me “I have spoken to a lot of people and you are the first person who could explain this to me in a manner which I could understand.” 

I was just pleased that I was able to clear her confusion.


Top Photo Credit: (c) Can Stock Photo / joyfuldesigns

The Condominium Project Approval Team at ReadySetLoan is dedicated to helping condominium projects across the nation to obtain their approvals with FHA and the VA or become recertified with FHA.  We have assisted nearly 200 condominiums and we can help your association.


ReadySetLoan is an active member of the Connecticut and New England chapters of the Community Associations Institute (CAI) and is a frequent contributor to Common Interest Magazine as an expert in FHA/VA condominium project approvals.


Please contact us with any questions regarding FHA or VA condominium project approvals.  You can email me at askeric@readysetloan.com or call me at 404-433-4565. I will be happy to answer any of your questions.


FHA/VA Condo Approval Specialist

404-433-4565 Cell Phone

860-644-3772 Fax Phone

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Comment balloon 4 commentsReadySetLoan Condo Approval Team • April 10 2015 04:05AM


Eric, You did clear up a muddy issue here.

Bill Roberts

Posted by Bill Roberts, "Baby Boomer" Retirement Planner (Brooks and Dunphy Real Estate) over 4 years ago

Thank you Bill Roberts .  Nice to see you again!

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) over 4 years ago

It was always my understanding that you get the approvals for each phase. Great topic as usual Eric.

Posted by Joe Petrowsky, Your Mortgage Consultant for Life (Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709) over 4 years ago

Hi Joe Petrowsky - units can be annexed in even if the legal phase is not complete.  However, the presale is still calculated on the total phase.  Thank you for stopping by!

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) over 4 years ago