Buying a Florida condo with FHA: approvals, assessments and what to check first.

The building has to be approved

To use FHA on a condo, the condo project generally needs to be on HUD's list of approved projects. Approval looks at the association's finances, insurance, how many units are owner occupied, delinquent dues, litigation and commercial space. Approvals expire, so a building that was approved a few years ago may not be now. Check before you make an offer.

Single unit approval

If the building isn't approved, FHA may still allow financing for one unit through single unit approval. The project still has to meet requirements, including a minimum share of owner occupied units, limits on how many units already have FHA loans, healthy reserves and limited delinquent dues. Not every lender offers single unit approval, and it requires documents from the association, so it adds time.

Florida's newer condo laws

After the Surfside collapse, Florida began requiring milestone structural inspections for older multi story condo buildings and structural integrity reserve studies, and associations can no longer waive certain reserves. Many associations have raised dues sharply or levied large special assessments to catch up.

For buyers, that means three things. Ask for the latest inspection and reserve study. Ask whether any special assessment is pending or planned, and who pays it. And factor higher dues into your budget, because they count in your debt ratio and can affect project approval.

Condos that won't work with FHA

Condotels, units in buildings run like hotels with rental programs and front desks, aren't eligible for FHA. Buildings with significant litigation, too much commercial space or major financial problems may not qualify either. For those, look at non QM options, including condotel and non warrantable condo loans.

What to check before you offer

Whether the building is FHA approved, or could qualify for single unit approval. Current HOA dues and what they include. Any pending or planned special assessments. The status of milestone inspections and reserve studies. The association's insurance coverage. And whether the association responds quickly to lender questionnaires, because slow associations delay closings.

A great condo, an unapproved building

Priya found a two bedroom condo near Lake Nona at a good price, but the building wasn't on the FHA approved list.

The association was well funded and mostly owner occupied, so it met single unit approval requirements. It added about two weeks to her closing, but she bought with 3.5% down instead of the larger down payment a conventional loan would have required for her.