FHA Spot Loans Mortgage Guidelines And How Does It Work?


This BLOG On FHA Spot Loans Mortgage Guidelines And How Does It Work Was UPDATED And PUBLISHED On August 20th, 2019

FHA Spot Loans
Gustan Cho Team

The Federal Housing Administration (FHA) has condominium lending guidelines that are different than mortgage lending guidelines for regular single family home purchase loans.  As time passes, it is becoming more difficult to purchase condominium units with FHA Loans. The reason is that more and more condominium complexes are not renewing their annual HUD Certifications for the condo complex to be HUD Approved.

  • The Federal Housing Administration allows borrowers to qualify for FHA loans for condominium purchases
  • However, the condominium complex needs to be FHA approved
  • Non-FHA approved condo buildings are not approved for FHA condo loans
  • FHA spot loans were FHA loans which allowed condominium buyers to purchase condominiums in non-FHA approved condominium complexes
  • The condominium mortgage was granted the flexibility to qualify condominium loans on condo units within a complex that was not on HUD’s FHA approved list of condominium complexes

FHA Spot Loans is now available today with the new changes of HUD Condominium Guidelines. In this article, we will discuss and cover FHA Spot Loans and HUD Condominium Guidelines on FHA Loans.

Condominium Unit Buyers

Condominium Unit Buyers

There are many new rules and regulations today that it is impossible for every mortgage loan officer to know them all.

  • There are many veteran mortgage loan officers with 20 plus years of experience who may not realize the new laws and regulations when dealing with a borrower’s case scenario

One recent case scenario:

  • A borrower was referred to me who had a purchase contract on a condominium unit that is in a non-FHA approved condominium complex and her mortgage contingency period was over and she had a closing coming up in less two weeks
  • My borrower has good credit and $40,000 income as a school teacher and $100,000 in student loans that have been deferred for over a year
  • The condominium purchase price $65,000
  • She does have a $500 car payment and minor credit card payments every month
  • Her credit scores are in the upper 600’s

Non-FHA Approved Condominiums

Non-FHA Approved Condominiums

As mentioned earlier, it is getting more and more difficult in getting an FHA Loan on condominiums. This is because condominium complexes are not renewing their HUD Certifications annually. The borrower was told by her first mortgage loan originator that she will have no problem getting a mortgage loan approved on a non-FHA approved condominium unit with an FHA Spot Loans.

  • The borrower got a pre-approval letter from her initial mortgage loan originator and submitted all her mortgage documents
  • A few weeks later I get a call from one of my realtor partners asking me if I can help her client get approved for a condominium loan where she was promised an approval from a mortgage loan originator via FHA spot loans


  • FHA spot loans no longer existed and were eliminated years ago
  • The first mortgage loan originator was a veteran reputable loan originator who has been in business for many years but did not realize that HUD has eliminated FHA spot loans

GREAT NEWS: FHA Spot Loans is now available. HUD Condo Guidelines has updated that condo complexes no longer have to be HUD Approved for buyers to purchase a condo unit.

FHA Spot Loans Now Available For Condominium Buyers

FHA Spot Loans No Longer Available For Condominium Buyers

FHA Spot Loans was eliminated on February 1, 2010. It was no longer an option for borrowers for condominium purchases. However, the great news is that HUD changed the HUD Condo Guidelines and no longer requires condo complexes to be HUD-Approved.

  • For those who are interested in purchasing a non-FHA approved condominium unit, the condominium complex no longer needs to be HUD Approved
  • HUD-approved condominium projects needed to be re-certified every two years in order to remain on HUD’s approved list of condominium projects
  • A non-FHA approved condominium complex can easily be on FHA approved list
  • However, the necessary inspections and fees need to be applied
  • But effective October 2019, condo buyers can be eligible to purchase condos in non-HUD-Approved Condo Complexes
  • Restrictions do apply

Condominium Home Buyers who need to qualify for FHA Loans or other mortgage loans with a direct lender with no overlays on government and conventional loans can contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. Gustan Cho Associates offers financing on non-warrantable and condotel financing.

Gustan Cho NMLS ID # 873293


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