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Unlock More Deals with FHA Single Unit Condo Approval: What Real Estate Agents Need to Know
- Todd Davidson
- Apr 11
- 3 min read
As a real estate agent, you're always looking for ways to expand your clients' options and move deals forward. When it comes to condos, financing can sometimes be a roadblock—especially for FHA buyers. But thanks to FHA Single Unit Approval (formerly known as "Spot Approval"), you've got a powerful tool to keep in your back pocket.
Here's how it works—and why it could be the key to closing more deals in today's market.
What Is FHA Single Unit Condo Approval?
FHA Single Unit Approval allows a buyer to use an FHA loan to purchase a single unit in a non-FHA-approved condominium project—as long as specific eligibility requirements are met. In plain terms: If a buyer loves a condo in a building not on HUD's approved list, you might still be able to make it work.
Why This Is a Game-Changer for Agents
Let's be honest—finding FHA-approved condos can be tough, especially in markets with older buildings or HOAs that haven't gone through the approval process. Plus many HOA's opt to not pay the $ to get their developments approved and rely on the Single Unit Approval process. Instead of walking away from a sale, Single Unit Approval gives you a new option:
Expand inventory for FHA buyers
Revive deals that would've otherwise died due to financing limitations
Help sellers by opening their units up to a larger pool of buyers
And in today's competitive market, every deal counts.
What You Need to Know as an Agent
You don't need to be an underwriter, but understanding the basics can help you guide your clients more effectively and set the right expectations.
Basic Condo Project Criteria:
At least 50% of units must be owner-occupied
No more than 10% of units owned by one entity
The project must be completed (no new construction or gut rehabs without final approval)
The HOA must be financially stable, with adequate reserves and no ongoing litigation
Unit & Buyer Criteria:
The buyer must intend to live in the unit
The unit must meet FHA minimum property standards
It must be a residential use—not a vacation rental or short-term lease setup
How the Process Works
Once you identify a unit your FHA buyer loves, you'll want to:
Check the HUD database to confirm the project is not already FHA-approved: HUD Condo Lookup Tool
Coordinate with the lender, who will submit the Single Unit Approval request through FHA's HRAP system.
Work with the listing agent or HOA to gather necessary documentation (like the budget, insurance info, and occupancy rate).
Pro tip: Having a lender experienced in FHA condos/single unit approval makes a huge difference. They'll know how to navigate the paperwork and streamline the process.
A Strategic Advantage in Today's Market
As FHA buyers compete in tight markets, being able to say, "Yes, we can finance this condo" gives you an edge. And with many buyers relying on FHA loans for affordability, it's a win-win for everyone.
Final Thoughts
Don't let FHA condo myths kill your next deal. Single Unit Approval is underused, underappreciated, and full of potential. By knowing how it works, you position yourself as a savvy, solution-oriented agent who can get clients across the finish line—even when the financing waters get a little choppy.
Have an FHA buyer looking at condo's? Have a condo listing that's not FHA approved and want to expand your buyer pool? Reach out today to partner with a lender who specializes in FHA-Single Unit Approval and add this powerful tool to your agent tool kit!
Todd Davidson
Mortgage Loan Officer
P: 971-275-2465
About the Author:
As a Mortgage Loan Officer with years of experience, Todd has guided countless clients through the intricacies of home financing, making their dreams of homeownership a reality. His expertise in mortgage lending and his deep understanding of the challenges associated with FHA Single Unit Approval, uniquely position him to offer valuable insights and advice.
As an author, influencer, and mortgage loan officer, Todd Davidson brings a wealth of knowledge and a genuine passion for assisting others in achieving their housing and goals. His dedication to the well-being of his clients and readers shines through in his work, making him a trusted resource for anyone embarking on the exciting adventure of home ownership.
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