FHA with 3.5% Down Payment now allows single-unit condo approvals (also called spot approvals) — even if the condominium project is not on the FHA-approved list.

This change opens the door for more buyers to qualify for FHA financing on condos, creating new opportunities for closings.

What this means for your buyers:

- Access to FHA financing on more condo units

- Lower down payment options starting at 3.5%

- Expanded opportunities in communities not fully FHA-approved
 

As your loan partner, I can guide you and your clients through the spot approval process and work directly with HOAs to make transactions smooth and simple.
 

Here’s how it works:

Purpose: Allows a buyer to get an FHA loan in a condo project that is not fully FHA-approved.

Who can use it: Buyers purchasing one unit in a condo development.

Restrictions:The condo project must have at least 5 units.No more than 10% of units (in projects with 10+ units) can be FHA-insured.For smaller projects (less than 10 units), only 2 units total can have FHA financing.

HOA Documentation Needed:Budget, insurance certificate, and sometimes reserve study.HOA must confirm no litigation affecting safety, structural soundness, or habitability.Owner-occupancy must meet FHA’s guidelines (generally 50% or more).

Loan-to-Value (LTV):Maximum 90% LTV (which means at least 10% down) for a single-unit approval.

Submission Process
The lender (not the buyer or HOA directly) submits the request for single-unit approval through HUD’s FHA Connection system.

The lender collects HOA docs (budget, insurance, questionnaire).

FHA reviews eligibility — usually a few days to a couple of weeks turnaround.

Things to Watch Out For

If the condo has major litigation, low reserves, or poor insurance coverage, FHA may deny approval.

FHA will also reject if there are too many investor-owned units or high delinquency rates in assessments.

In short: Yes, you can submit for a special/single-unit approval in Florida for FHA, but it must go through the lender handling the FHA loan.

Let’s connect so we can help more of your clients become homeowners!