What FHA project approval is
FHA does not approve condominium units. It approves condominium projects, and a unit becomes eligible for FHA-insured financing because the project it sits in has been approved — or, in narrow circumstances, through the separate Single-Unit Approval path.
The rules live in two places, and knowing which is which explains most of the confusion on this topic. The underlying regulation is 24 CFR 203.43b, "Eligibility of mortgages involving a dwelling unit in a condominium project." The operative policy is HUD Handbook 4000.1, the FHA Single Family Housing Policy Handbook, whose condominium material sits at Section II.C (project approval: HRAP, DELRAP, eligibility criteria, recertification) and Section II.A.8.p (unit-level requirements, including Single-Unit Approval at II.A.8.p.iii). The condominium sections were issued 14 August 2019 and became effective 15 October 2019. The handbook is then amended by numbered updates; Update 17 carries a transmittal date of 26 November 2025.
The regulation requires, among other things, that a project be primarily residential in nature and not intended for rental for transient or hotel purposes, that it consist solely of one-family units, that it comply with applicable federal, state and local law including zoning and accessibility requirements, and that it be complete with all common elements finished. Those are threshold conditions. The ratio tests sit on top of them.
Approval is not a quality rating and it is not a statement about the building's condition. It is a finding that a project met a set of eligibility criteria on the day it was reviewed.
Why FHA condo numbers drift: ranges in the regulation, figures in the handbook
This is the structural fact that explains why so much published FHA condo content is stale, and it is worth understanding before reading any percentage anywhere.
The 2019 final rule deliberately moved the programme's core parameters out of mortgagee letters and into regulation — but expressed as ranges, with HUD free to set the operative figure anywhere inside the range by notice or handbook, without new rulemaking. The ranges currently in 24 CFR 203.43b, as the regulation stood on 13 August 2026, are:
- Commercial and non-residential space: between 25 and 55 percent of total floor area
- FHA insurance concentration: between 25 and 75 percent of total units
- Owner-occupancy minimum: between 30 and 75 percent of total units
- Single-unit approval share: HUD may set it anywhere within 0 to 20 percent of total units
Inside those ranges, HUD has published the following operative figures. Announcing the 2019 rule, HUD stated that approved projects must have "a minimum of 50 percent of the units occupied by owners for most projects," that FHA "will insure up to 50 percent of total units" in an approved project, and that commercial and non-residential space must "not exceed 35 percent of the project's total floor area." HUD's own research journal describes the owner-occupancy standard as at least 50 percent, or 35 percent in limited, low-risk situations with additional oversight. HUD's public knowledge base sets out further variants by project type, including lower thresholds for new construction and higher ones for two-to-four-unit projects; that article carries no visible revision date, which is a reason to treat the sub-breakdown as directional rather than fixed.
Higher commercial percentages are available by exception — Form HUD-9992, in its 25 February 2025 revision, refers to an exception percentage range for projects above the standard limit. Before 2019 the commercial limit was 25 percent with exceptions to 49 percent, and FHA concentration was 50 percent with exceptions to 100 percent.
The tests HUD runs, including the ones with no published number
Beyond occupancy, concentration and commercial space, the project review covers finances, insurance and litigation. Some of these are published; some are not, and it is more useful to say so than to repeat a number from a secondary source.
Delinquent assessments
The measurement basis is verified and is worth knowing on its own: FHA tests units more than 60 days past due on association assessments. That is the number that matters when reading a delinquency report, because a 30-day figure and a 60-day figure describe very different associations. Form HUD-9992 defers the percentage cap itself to "the FHA requirement" in Handbook 4000.1 and does not print it. A cap is widely republished across the internet; it is not printed on the form, so this page does not assert one.
Reserves
Same shape. HUD-9992 requires that the reserve account be funded "with at least the required FHA percentage of the aggregate of 12 months of Unit assessments," and does not print the percentage. Note the measurement basis carefully, because it is not the same as the conventional test: FHA measures against twelve months of unit assessments, while Fannie Mae and Freddie Mac measure the reserve allocation as a share of the annual budget. Structurally similar, separately drafted, and not interchangeable.
Single-entity ownership
HUD-9992 asks whether any single owner owns more than one unit and requires compliance with the FHA requirement, again deferring the cap to the handbook. The cap is not printed on the form.
Insurance
The association must carry hazard, liability and flood coverage as applicable, with liability coverage of at least $1,000,000 for any single occurrence, and borrowers need an HO-6 "walls-in" policy where the master policy does not cover unit interiors. HUD has issued a partial waiver permitting individual unit owners to carry their own coverage instead of a project-wide master policy for manufactured housing condominium projects, detached condominium housing projects and common interest housing developments that cannot meet the standard requirement; that document describes itself as running one year from issuance, so its current status should be checked on HUD's condominium page rather than assumed.
Litigation
HUD-9992 requires disclosure of pending litigation and an assessment of whether it affects the project's solvency or the safety, structural soundness, habitability or functional use of the project. That framing is the useful part: FHA is not asking whether the association is in court, it is asking what the case is about. A small collections action and a construction-defect suit are read very differently.
HRAP and DELRAP: the two routes to approval
There are two processes, and both use Form HUD-9992, FHA Condominium Project Approval (revised 25 February 2025, OMB control number 2502-0610).
HRAP — the HUD Review and Approval Process. The submission package goes to HUD directly, at a Homeownership Center, and HUD reviews and approves it.
DELRAP — the Direct Endorsement Lender Review and Approval Process. An FHA-approved Direct Endorsement mortgagee with the required staff experience reviews the project and approves it itself, then reports the approval to HUD. The 2019 final rule relaxed the staffing restriction HUD had proposed, allowing participation by staff supervised by personnel who meet the experience requirements rather than requiring every participating staffer to meet them, and gave HUD discretion to reduce the number of reviews a lender must complete before receiving unconditional DELRAP authority.
Practically, the submission comes from the industry side. HUD-9992 is a mortgagee-certified form and HUD's process materials are mortgagee-facing, so an individual buyer cannot unilaterally get a project FHA-approved. Where an association wants approval, the package is normally assembled by the association or its management company and sponsored through a lender, or handled by a Direct Endorsement lender under DELRAP.
HUD publishes required-document checklists for project approval, single-unit approval and loan level, all last updated 14 February 2025. Several currency rules in them are useful to an association preparing a package: year-to-date financial statements must be dated within 90 days where the prior year's actuals are more than 90 days old, balance sheets within 90 days prior to submission, and gut-rehabilitation engineering or architectural inspections within 12 months. A package assembled from stale financials is a common and entirely avoidable cause of delay.
Three years, and the way approval lapses
FHA project approval runs for three years, extended from two by the 2019 rule. A recertification request may be filed in a window running from six months before to six months after expiration, and recertification is structured as an update to the existing project file rather than a complete resubmission — that was an explicit purpose of the rule.
What this means in practice is that approval lapses quietly. Nothing happens to the building. No one is notified in a way buyers see. The listing may still say "FHA approved" because it did last year. A project whose approval has lapsed is simply treated as unapproved, and a unit there needs either full reapproval or a Single-Unit Approval before FHA will insure a mortgage on it.
HUD's FHA-approved condominium lookup shows approval status and dates, and a companion Condominium Logging Package Search shows the status of packages submitted for review or recertification — which is how you tell whether a lapsed project has a recertification actually in flight rather than merely intended. Neither tool tells you how much FHA insurance the project has already absorbed, and that matters: FHA insures up to 50 percent of total units, and HUD may suspend the issuance of new case numbers in a project that exceeds the concentration limit. A project can read "approved" and still be closed to new FHA lending.
The 2019 rule, and why it still matters
The current regime dates from a single final rule: "Project Approval for Single-Family Condominiums," 84 FR 41846, published 15 August 2019 and effective 15 October 2019 (RIN 2502-AJ30, docket FR-5715-F-02). It is frequently mis-cited to a pin page inside the document; the rule's first page is 41846.
It did five things that still shape every FHA condominium conversation:
- Created Single-Unit Approval, restoring a path to insure an individual unit in a project that is not FHA-approved — the successor to the "spot approval" process FHA eliminated in 2010.
- Moved the core parameters into regulation as ranges, with HUD setting the operative figure by notice. This is the drift mechanism described above.
- Extended project approval from two years to three and created the six-months-either-side recertification window, with recertification as a file update.
- Set the ranges, narrowing the proposed commercial ceiling from 60 percent to 55 percent "to acknowledge the future potential of mixed-use developments while avoiding risk to the MMIF," and describing 30 percent as the lowest owner-occupancy limit compatible with risk to the Mutual Mortgage Insurance Fund.
- Relaxed the proposed DELRAP staffing restriction.
One caution about currency. HUD's handbook landing page references an August 2026 redline update to Handbook 4000.1. Whether that update changed Section II.C is not established here, and this page does not assume it did. On a subject where HUD can move a figure inside a regulatory range by notice, the correct habit is to read the current handbook rather than any summary of it, including this one.
Common questions
How long does FHA condo approval last?
Three years. The 2019 final rule extended it from two, and a recertification request may be filed from six months before expiration to six months after. Recertification updates the existing project file rather than restarting the process. A project whose approval has lapsed is treated as unapproved until it is recertified or reapproved.
What is the difference between HRAP and DELRAP?
Who does the reviewing. Under HRAP, the package goes to HUD at a Homeownership Center and HUD approves the project. Under DELRAP, an FHA-approved Direct Endorsement mortgagee with the required staff experience reviews and approves the project itself, then reports the approval to HUD. Both use Form HUD-9992, and the eligibility criteria are the same either way.
Can I get a condominium project FHA approved myself as the buyer?
No. Form HUD-9992 is a mortgagee-certified form and HUD's process materials are addressed to mortgagees, so approval has to come through a lender under DELRAP or through a package submitted to HUD under HRAP — normally assembled by the association or its management company and sponsored through a lender. A buyer under contract cannot start the process alone, which is why Single-Unit Approval exists.
What is FHA's owner-occupancy requirement for condos?
HUD's published general standard, announced with the 2019 rule, is a minimum of 50 percent owner-occupancy for most approved projects, with an exception floor of 35 percent in limited, low-risk situations with additional oversight. The underlying regulation permits HUD to set the figure anywhere between 30 and 75 percent, and HUD's knowledge base sets out variants for new construction, small projects and loan-level tests. Check the current handbook before relying on any single figure.
What percentage of owners can be behind on assessments?
FHA measures delinquency at more than 60 days past due, but the percentage cap is not printed on Form HUD-9992 — the form defers it to the requirement in Handbook 4000.1. A figure is widely republished online without a primary citation, so this page does not assert one. If it matters to your transaction, have the lender confirm the current handbook figure rather than relying on a secondary source.
Does FHA approval mean the building is in good condition?
No. FHA project approval is an eligibility finding about ownership mix, finances, insurance, documents and legal compliance, made on the day the project was reviewed. It is not a structural inspection and it is not a warranty. A project can hold valid FHA approval and still have a serious deferred maintenance backlog that no one has yet quantified in a reserve study or an engineering report.