FHA Condo Approval Specialist: Our Condominium Has 50% FHA Concentration - Now What?

Our Condominium Has 50% FHA Concentration - Now What?

fha condo approval concentration limitOur Condominium Has 50% FHA Concentration - Now What?

Our first response would be to make sure that you don’t lose your FHA Condominium Project Approval!  Obviously, FHA buyers are attracted to your community so it would be beneficial to the association to maintain this approval.

Really, though, the question stems from the FHA guideline that the maximum concentration of FHA loans in a condominium is 50%.  FHA uses case numbers to track all FHA loans and no FHA loan may exist without one.  Once the 50% level is reached, case numbers may no longer be automatically assigned using FHA’s online system FHA Connection.

However, FHA does allow greater than 50% concentration in condominiums that meet its guidelines to be granted an exception.  In these cases, lenders must contact the jurisdictional Homeownership Center (HOC) and request a case number manually.  If the condominium meets the exception criteria, FHA will allow up to 100% FHA loan concentration in the condominium.

All of these criteria must be met in order for FHA to allow the exception:

  • The project must have at least 4 units

  • The project must be 100% complete and has been completed for more than 1 year

  • 100% of the units have transferred from the developer and no one entity owns more than 10% of the units**

  • The project’s budget provides for the funding of a reserve account greater than or equal to 10% of the annual budget

  • Voting control has transferred to the unit owners

  • The owner-occupancy ratio is at least 50%

**Exceptions to the 10% criterion: (1) if the project is 10 units or less, no one person may own more than one unit; (2) Federal, state and qualified non-profit programs may own more than 10% of the units provided that the program is designed to assist low- and moderate- income buyers and renters; and (3) units owned and inhabited by an investor are considered owner-occupied.

The concentration exception terminates with the expiration of the condominium’s FHA project approval.  Once the project is recertified, the concentration exception may be sought again.  Unless HUD changes this with the issuance of another Mortgagee Letter, it can be assumed that exceptions will continue to be granted once the project is approved and continues to meet the above-mentioned criteria.

Image courtesy of freedigitalphotos.net/stuartmiles

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 13 commentsReadySetLoan Condo Approval Team • August 05 2015 08:15AM


Good morning, Eric -- your deep and intimate knowledge of this segment of the mortgage market continues to impress me.   Another excellent post.   

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 over 5 years ago

I thought owner ratio has to be 75% or over to be eligible for FHA loan approval.

Posted by Sam Shueh, mba, cdpe, reopro, pe ( (408) 425-1601) over 5 years ago

Wow, thank you Michael Jacobs 

Sam Shueh - actually the owner ratio has to be at least 50%.  But this article was speaking about the FHA loan concentration within the condominium.  The maximum number of FHA loans that can encumber units in a condominium is 50% unless an exception is granted by HUD

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) over 5 years ago

Definitely bookmarking this post as an educational piece and handout for my local agents that face a property/transaction such as this, Eric Boucher  ... very well-written and helpful ...


Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 5 years ago

With so many rules and exceptions, there is bound to be confusion. Regardless, to answer your question of "now what?":  foreclosures, before too long.

Posted by Olga Simoncelli, CONSULTANT, Real Estate Services & Risk Management (Veritas Prime, LLC dba Veritas Prime Real Estate) over 5 years ago

Thank you very much Gene Mundt, Chicago-area Mortgage Lender - www.genemundt.com .  I'm going to email you...

Thank you for reading Olga

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) over 5 years ago

Don't have many FHA loans in this area so really don't have to deal with it much but thanks for the info.

Posted by Bill Reddington, Destin Florida Real Estate (Re/max By The Sea) over 5 years ago

Eric thank you for the info, I was not aware of the FHA Concentration Exception.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 5 years ago

This is information I can never find when I need it, so I will be bookmarking this.  Thank you, Eric Boucher 

Posted by Margaret Woda, Maryland Real Estate & Military Relocation (Long & Foster Real Estate, Inc.) over 5 years ago

Hi Eric: Glad that many buildings in your area accept FHA. It is a challenge here. There are only one or two buildings in my community that accept FHA/VA. It is much easier with single family homes.

Posted by Janice Zaltman, South Florida Residential Real Estate (United Realty Group) over 5 years ago

Eric Boucher nice and simple explanation of what one can do when Condo complex has 50% concentration. Did not know exception is not a challenge.

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) over 5 years ago

Hi George Souto - I'm glad that I was able to provide useful information to you!

Thank you Margaret Woda - hopefully you will be able to make use of it in the future!

Sorry to hear that Janice Zaltman, Realtor, LEED AP Hollywood Beach Florida .  We have been working diligently to get as many condominiums approved with FHA and the VA as humanly possible

Thank you Praful Thakkar - if you run into this scenario, please don't hesitate to contact me.

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) over 5 years ago

Need CT Real Estate? Call 404-433-4565 Eric Boucher.

Posted by Will Nesbitt, Nesbitt Realty is a family-run brokerage. (Nesbitt Realty at Condo Alexandria) over 5 years ago