Buying a Condo: Documents, FHA Approval, Insurance

Condo vs house: what changes

With a house, you usually own the land and the whole building. With a condo, you own your unit and share the common elements with other owners. The association collects fees to run them.

The Census Bureau notes that condo fees “cover more shared services and structural features like roofs and hallways” than typical HOA fees. The CFPB says association dues “can range from a few hundred dollars a month to more than one thousand dollars a month.” They are usually paid directly to the association, not through your mortgage payment, so add them yourself when you test affordability (see escrow accounts).

Rules also change. Covenants, conditions and restrictions (CC&Rs) govern how the property can be used. Cornell’s Legal Information Institute notes they “are usually recorded in the county clerk’s office and run with the land.”

Association documents to read before you sign

Lenders reviewing a condo for FHA ask for a list of documents. HUD’s Single-Unit Approval checklist (last updated February 14, 2025) is a useful reading list for any buyer:

State law can give you time to review these papers. In Florida, a resale contract can be voidable by the buyer within 7 days, excluding weekends and legal holidays, after receiving the declaration, bylaws, rules, the latest annual financial statement and budget. Other states set their own rules.

FHA condo approval (HUD)

FHA insures condo loans “for up to 30-year terms” in an FHA-approved project, or in a non-approved project that meets Single-Unit Approval requirements. HUD’s search tool lists approved projects.

The condominium section of Handbook 4000.1 (update published August 12, 2026) carries an effective date of November 10, 2026. For Single-Unit Approval, it requires, among other things:

• a project with at least five Units that is not a manufactured home;
• a certificate of occupancy for the unit issued at least one year ago, or a unit that has been occupied;
• owner occupancy of at least 50 percent of the units;
• FHA-insured loans not exceeding 10 percent of units in projects with 20 or more Units, and no more than two in smaller projects;
• reserves funded with at least 10 percent of 12 months of unit assessments, unless a reserve study supports less;
• no more than 15 percent of units more than 60 Days past due on dues or special assessments.

A manually underwritten loan is capped at a 90 percent loan-to-value ratio under Single-Unit Approval. For the loan itself, see FHA loans.

The master insurance policy and your HO-6

The association insures the building through a master or blanket policy. Under HUD’s handbook, that policy must “fully cover the insurable replacement cost of all Units and all insurable Common Elements” for an FHA-approved project.

The interior is often your responsibility. HUD requires an FHA borrower to obtain a walls-in (HO-6) policy “if the master or blanket policy does not include interior unit coverage.” Ask the association for the certificate of insurance and compare it with your own policy (see homeowners insurance).

Special assessments and building condition

Florida law defines a special assessment as “any assessment levied against a unit owner other than the assessment required by a budget adopted annually.” Definitions vary by state. HUD’s condo questionnaire (form HUD-9991) collects data on special assessments, the reserve account balance and units in arrears, so ask the association for the same figures.

Some states require structural reviews. In Florida, condo buildings three habitable stories or more must have a milestone inspection by December 31 of the year the building reaches 30 years of age, then every 10 years. Florida associations in those buildings must also complete a structural integrity reserve study at least every 10 years. Low reserves or a recent inspection report can signal a future assessment. A private inspection of the unit is separate (see home inspection cost).