Many condominium projects have already met the FHA requirements for financing individual condo units, however, some condominium associations will not make the effort to become approved.

FHA spot loans are designed for borrowers wanting to buy or refinance a condo in a non-FHA approved project. The following guidelines determine if a condo qualifies for an FHA spot loan: 

• The condominium association cannot have a first right of refusal restriction on sales.

• The Condos must provide undivided ownership of common areas by the unit owners.

• The condominium project cannot be subject to additional phasing or annexation.

• No legal action or special assessments can be pending against the condo association.

• Common areas must be under the control of the condo association for at least one year.

• At least 90 percent of the units in the condominium project must be already sold.

• At least 51 percent of the condominium units in the project must be owner-occupied.

• There can be no adverse environmental factors affecting the project or individual condos.

• No single entity can own more than 10 percent of the total units in the condo project.

• The condo units must be owned in fee simple or under a lease hold acceptable to FHA.

• For projects over 30 condos, no more than 10 percent of the condos can have FHA loans, and for projects of 30 condos or less, no more than 20 percent of the condos can have FHA loans.

FHA approved lenders can make sure the requirements are satisfied to process FHA spot loans.