source:
  type: guide
  id: hud-4000-1-ii-p-condominiums
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — p. Condominiums
    (08/19/2024)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — p. Condominiums
    (08/19/2024).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-p-condominiums-full
  canonical_id: hud-4000-1-ii-p-condominiums-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — p. Condominiums
    (08/19/2024)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — p. Condominiums
      (08/19/2024)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'p. Condominiums (08/19/2024) The Federal Housing Administration
      (FHA) will insure Mortgages on Condominium Units (Units) in Approved Condominium
      Projects that have been approved under the HUD Review and Approval Process (HRAP)
      or Direct Endorsement Lender Review and Approval Process (DELRAP). In addition,
      FHA will insure Mortgages on Units approved in accordance with the Single-Unit
      Approval section or that meet the definition and standards for a Site Condominium.
      i. Units Not Requiring Approval (A) Real Estate Owned Mortgages HUD Real Estate
      Owned (REO) Mortgage transactions do not require Condominium Project Approval
      or Single-Unit Approval. If the Unit is in a Condominium Project that has an
      FHA Condo ID, the Mortgagee must enter the FHA Condo ID when the FHA case number
      is requested. (B) Streamline Refinances Streamline Refinances do not require
      Condominium Project Approval or Single-Unit Approval. If the Unit is in a Condominium
      Project that has an FHA Condo ID, the Mortgagee must enter the FHA Condo ID
      when the FHA case number is requested. ii. Requirements for Units in Approved
      Condominium Projects The Mortgagee must verify the following requirements for
      individual Units located in an Approved Condominium Project or Legal Phase.
      (A) Condominium Project Approval Status The Mortgagee must confirm the Condominium
      Project is on the list of FHA- Approved Condominium Projects at the time of
      case number assignment and must enter the FHA Condo ID in the Federal Housing
      Administration Connection (FHAC) Case Assignment screen. (B) FHA Insurance Concentration
      (1) Definition FHA Insurance Concentration refers to the number of FHA-insured
      Mortgages within a Condominium Project. (2) Standard FHA may suspend the issuance
      of new FHA case numbers for a Mortgage on a Unit in a Condominium Project where
      the FHA Insurance Concentration is greater than 50 percent of the total number
      of Units in the Condominium Project. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      A. Title II Insured Housing Programs Forward Mortgages 8. Programs and Products
      - Condominiums (08/19/2024) Handbook 4000.1 503 Last Revised: 11/26/2025 (C)
      Form HUD-9991, FHA Condominium Loan Level/Single-Unit Approval Questionnaire
      (1) Definition Form HUD-9991, FHA Condominium Loan Level/Single-Unit Approval
      Questionnaire, refers to a set of questions designed to collect pertinent loan,
      Condominium Project, and Unit information for FHA insurance endorsement. (2)
      Standard The Mortgagee must submit a completed, signed, and dated form HUD-9991.
      (D) Owner Occupancy Percentage (1) Definition Owner Occupancy Percentage refers
      to the percentage of Units considered owner- occupied as shown in the calculation.
      (2) Standard The Mortgagee must determine the Approved Condominium Project has
      an Owner Occupancy Percentage of at least 35 percent of the total number of
      Units. The Mortgagee must report the Owner Occupancy Percentage in FHAC when
      the functionality becomes available. (3) Required Documentation The Mortgagee
      must submit form HUD-9991. (4) Calculation For the sole purposes of calculating
      the Owner Occupancy Percentage, the numerator of the calculation for a multi-phased
      Condominium Project includes the total number of the following Units in the
      first declared Legal Phase and cumulatively in subsequent Legal Phases, or for
      a single-phased Condominium Project, all of the following Units in the numerator
      of the calculation: • any Unit that is occupied by the owner as their place
      of abode for any portion of the calendar year and that is not rented for a majority
      of the calendar year; • any Unit listed for sale, and not listed for rent, that
      was previously occupied by the owner as their place of abode for any portion
      of the calendar year and that is not rented for a majority of the calendar year;
      or II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing
      Programs Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024)
      Handbook 4000.1 504 Last Revised: 11/26/2025 • any Unit sold to an owner who
      intends to occupy the Unit as their place of abode for any portion of the calendar
      year and has no intent to rent the Unit for a majority of the calendar year.
      For the sole purposes of calculating the Owner Occupancy Percentage, the following
      Units are included in the denominator of the calculation for a: • multi-phased
      Condominium Project, the total number of Units in the first declared Legal Phase
      and cumulatively in subsequent Legal Phases; or • single-phased Condominium
      Project, all Units. A Unit owned by the builder/developer is not an owner-occupied
      Unit. (E) Financial Condition (1) Units in Arrears (a) Definition Units in Arrears
      refer to each Unit with Condominium Association dues or any special assessments
      that are more than 60 Days past due. (b) Standard The Mortgagee must verify
      that no more than 15 percent of the total Units are Units in Arrears (does not
      include late fees or administrative expenses). (c) Required Documentation The
      Mortgagee must submit form HUD-9991. (2) Individual Owner Concentration (a)
      Definition Individual Owner Concentration refers to the percentage of Units
      owned by a single owner or Related Party. Related Party includes, but is not
      limited to: • an individual serving as the Unit owners’ officer, director, or
      employee; or • a Unit owner’s direct parent company, subsidiary, or any related
      entity with which the Unit owner shares a common officer or director. (b) Standard
      The Mortgagee must determine that for Condominium Projects with 20 or more Units,
      the Individual Owner Concentration is 10 percent or less. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward Mortgages
      8. Programs and Products - Condominiums (08/19/2024) Handbook 4000.1 505 Last
      Revised: 11/26/2025 The Mortgagee must determine that for Condominium Projects
      with fewer than 20 Units, the Unit owner may not own more than one Unit. No
      Related Party may own a Unit. Exception Affordable housing Units owned by an
      eligible governmental or nonprofit program defined in 24 CFR § 203.41 are not
      subject to the Individual Owner Concentration requirements. The affordable housing
      Units must be identified by recorded legal documents. (c) Required Documentation
      The Mortgagee must submit form HUD-9991. (d) Calculation For the Individual
      Owner Concentration calculation: • on a multi-phased Condominium Project, the
      Individual Owner Concentration is calculated based on the total number of Units
      in the first declared Legal Phase and cumulatively on subsequent Legal Phases;
      or • for a single-phased Condominium Project, all Units are used in the denominator
      when calculating the Individual Owner Concentration, except that unoccupied
      and unsold Units owned by a builder/developer are excluded from the numerator
      and denominator in the Individual Owner Concentration calculation. The Mortgagee
      must use the total number of declared Units in the Condominium Project for Complete
      Condominium Projects and Gut Rehab to calculate the Individual Owner Concentration.
      (F) Insurance (1) Walls-In (HO-6) (a) Definition Walls-In Insurance refers to
      insurance that covers the interior of the Unit and Personal Property inside
      the Unit. (b) Standard The Mortgagee must verify that the Borrower has obtained
      a Walls-In policy (HO-6) if the master or blanket policy does not include interior
      unit coverage, including replacement of interior improvements and betterment
      coverage to insure improvements that the Borrower may have made to the Unit.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing
      Programs Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024)
      Handbook 4000.1 506 Last Revised: 11/26/2025 (c) Required Documentation The
      Mortgagee must submit form HUD-9991 and the certificate of insurance or complete
      copy of the insurance policy. (2) Hazard Insurance (a) Definition Hazard Insurance
      refers to insurance coverage that compensates for physical damage by fire, wind,
      or natural occurrences. (b) Standard The Mortgagee must verify that the Condominium
      Association has a master or blanket Hazard Insurance policy in place for the
      entire Condominium Project. The Condominium Association’s master or blanket
      Hazard Insurance policy must be in an amount to fully cover the insurable replacement
      cost of all Units and all insurable Common Elements in the Approved Condominium
      Project. The Mortgagee must verify that any policy with a coinsurance clause
      includes an agreed amount endorsement, selection of the agreed value option,
      or an amount of coverage to fully cover the insurable replacement cost of all
      Units and all insurable Common Elements in the Approved Condominium Project.
      The Mortgagee must verify that any pooled insurance policy satisfies the insurance
      coverage standard for each Condominium Project insured under the policy. The
      insurance policies must list the Condominium Association as the named insured,
      or, in the case of an affiliated Approved Condominium Project or Condominium
      Association, the name of the affiliated Approved Condominium Project or Condominium
      Association may be listed as a named insured. (c) Required Documentation The
      Mortgagee must submit form HUD-9991, the certificate of insurance or complete
      copy of the insurance policy, and if applicable, acceptable evidence of the
      replacement cost value. (3) Flood Insurance (a) Standard Flood Insurance for
      Condominiums must meet the requirements in Flood Insurance. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward
      Mortgages 8. Programs and Products - Condominiums (08/19/2024) Handbook 4000.1
      507 Last Revised: 11/26/2025 The Mortgagee must verify that the Approved Condominium
      Project located in a Special Flood Hazard Area (SFHA) continues to meet the
      Flood Insurance requirements in the Condominium Project Approval section. The
      insurance policies must list the Condominium Association as the named insured,
      or, in the case of an affiliated Approved Condominium Project or Condominium
      Association, the name of the affiliated Approved Condominium Project or Condominium
      Association may be listed as a named insured. (b) Required Documentation The
      Mortgagee must submit: • form HUD-9991; • if applicable, the Letter of Map Amendment
      (LOMA), Letter of Map Revision (LOMR), or a FEMA NFIP Elevation Certificate
      (FEMA Form FF-206-FY-22-152); and • if applicable, the certificate of insurance
      or a complete copy of the Flood Insurance policy. (4) Exception for FHA Insurance
      Requirements This exception applies to Manufactured Home Condominium Projects,
      Detached Condominium Housing Projects, and Common Interest Housing Developments
      unable to satisfy the current insurance requirements. (a) Definitions A Manufactured
      Home Condominium Project (MHCP) refers to a Condominium Project that consists
      of two or more Manufactured Homes. A Detached Condominium Housing Project (DCHP)
      refers to a Condominium Project that has individual detached Single Family Dwelling
      Units, garage, and onsite improvements that are owned and maintained by the
      homeowner. The ground beneath the residential improvements is owned by the Condominium
      Association or Homeowners’ Association (HOA) or is under a long-term leasehold
      interest and considered common area or limited common area. A Common Interest
      Housing Development (CIHD) refers to a planned residential community that may
      consist of Units within a two- to four-unit building and/or contain multiple
      housing types, structured with different ownership interests, managed by a common
      Condominium Association or HOA, and governed under one Declaration of Covenants,
      Conditions, and Restrictions (CC&Rs). The CIHD may share a variety of common
      amenities and services. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A.
      Title II Insured Housing Programs Forward Mortgages 8. Programs and Products
      - Condominiums (08/19/2024) Handbook 4000.1 508 Last Revised: 11/26/2025 (b)
      Standard The Mortgagee must verify that the Unit owners and the Condominium
      Association or HOA comply with FHA insurance coverage requirements. (i) Manufactured
      Housing Condominium Project If the governing documents require the Unit owners
      to maintain all applicable property insurance coverage for the dwelling, site
      area, and any Personal Property contained within, the MHCP is not required to
      maintain: • a blanket Hazard Insurance policy, provided the governing documents
      require the Unit owners to maintain individual Hazard Insurance (Walls-In);
      • a Liability Insurance policy, provided the governing documents require the
      Unit owners to maintain individual Liability Insurance; or • a Flood Insurance
      policy, provided that the governing documents require the Unit owners to maintain
      individual Flood Insurance if the Unit has been identified as located in a Special
      Flood Hazard Area (SFHA). The Condominium Association or HOA must carry master
      or blanket insurance for Structures/improvements that are considered common
      areas of the project outside the footprint of the individual site. (ii) Detached
      Condominium Housing Project If the governing documents require the Unit owners
      to maintain all applicable property insurance coverage for the dwelling, site
      area, and any Personal Property contained within, the DCHP Condominium Association
      or HOA is not required to maintain: • a blanket Hazard Insurance policy, provided
      the governing documents require the Unit owners to maintain individual Hazard
      Insurance; • a Liability Insurance policy, provided the governing documents
      require the Unit owners to maintain individual Liability Insurance; and • a
      Flood Insurance policy, provided the governing documents require the Unit owners
      to maintain individual Flood Insurance. The Condominium Association or HOA must
      carry master or blanket insurance for Structures/improvements that are considered
      common areas of the project outside the footprint of the individual site. II.
      ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs
      Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024) Handbook
      4000.1 509 Last Revised: 11/26/2025 (iii) Common Interest Housing Development
      If the governing documents require the Unit owners of the detached Single Family
      homes, Site Condominiums, duplex, or two-to-four units within the project to
      maintain and carry property insurance for the dwelling, site area and any Personal
      Property contained therein, the Condominium Association or HOA is not required
      to maintain: • a blanket Hazard Insurance policy, provided the governing documents
      require the Unit owners to maintain individual Hazard Insurance; • a Liability
      Insurance policy, provided the governing documents require the Unit owners to
      maintain individual Liability Insurance; and • a Flood Insurance policy, provided
      the governing documents require the Unit owners to maintain individual Flood
      Insurance. The Condominium Association or HOA must maintain and carry master/blanket
      Hazard, Liability, and Flood insurance for the Structures that contain the attached
      units and the common areas of the project. (c) Required Documentation The Mortgagee
      must submit form HUD-9991 and the certificates of insurance or complete copies
      of the insurance policies. (G) Leasehold Interest (1) Definition Leasehold Interest
      refers to real estate where the residential improvements are located on land
      that is subject to long-term lease from the underlying fee owner, creating a
      divided estate in the Property. (2) Standard The Mortgagee must determine if
      the Unit is owned under a Leasehold Interest and complies with the leasehold
      guidance. (3) Required Documentation The Mortgagee must document verification
      of compliance and submit the required documentation in the leasehold guidance.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing
      Programs Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024)
      Handbook 4000.1 510 Last Revised: 11/26/2025 (H) New Construction (1) Definitions
      New Construction refers to Proposed Construction, Properties (or Condominium
      Projects) Under Construction, and Properties Existing Less than One Year as
      defined below: • Proposed Construction refers to a Property where no concrete
      or permanent material has been placed. Digging of footing is not considered
      permanent. • Under Construction refers to the period from the first placement
      of permanent material to 100 percent completion with no Certificate of Occupancy
      (CO) or equivalent. • Existing Less than One Year refers to a Property that
      is 100 percent complete and has been completed less than one year from the date
      of issuance of the CO or equivalent. The Property must have never been occupied.
      Complete Condominium Project refers to a Condominium Project consisting of Units
      that are Existing Less than One Year and that are ready for occupancy, including
      completion of all the Infrastructure of the Condominium Project, and not subject
      to further rehabilitation or construction. (2) Standard For Complete Condominium
      Projects, the Mortgagee must comply with the General Condominium Project Approval
      Requirements and the New Construction guidance. (3) Required Documentation The
      Mortgagee must submit required documentation for New Construction under the
      guidance in New Construction. (I) Gut Rehabilitation (1) Definition Gut Rehabilitation
      (Gut Rehab) refers to the renovation of a Property down to the shell of the
      structure, including the replacement of all Heating, Ventilation and Air Conditioning
      (HVAC) and electrical components. (2) Standard For Gut Rehab conversion Condominium
      Projects, the Mortgagee must comply with the General Condominium Project Approval
      Requirements and the New Construction guidance. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      A. Title II Insured Housing Programs Forward Mortgages 8. Programs and Products
      - Condominiums (08/19/2024) Handbook 4000.1 511 Last Revised: 11/26/2025 (3)
      Required Documentation The Mortgagee must submit required documentation for
      Gut Rehab under the guidance in New Construction. (J) Manufactured Housing (1)
      Definition Manufactured Housing refers to Structures that are transportable
      in one or more sections and meet the additional definition standards prescribed
      in Property Acceptability Criteria for Manufactured Housing for Title II Insured
      Mortgages. They may be part of an Approved Condominium Project, provided the
      Condominium Project meets applicable FHA requirements. A Manufactured Home refers
      to a single dwelling unit of Manufactured Housing. (2) Standard For a Manufactured
      Home, the Mortgagee must comply with the General Condominium Project Approval
      Requirements and the guidance in Property Types - Manufactured Housing. (3)
      Required Documentation The Mortgagee must submit form HUD-9991 and the required
      documentation for Manufactured Housing under the guidance in Property Types
      - Manufactured Housing. iii. Single-Unit Approval Single-Unit Approval refers
      to approval of a Unit in a Condominium Project that is not an Approved Condominium
      Project. The Mortgagee must verify that the Unit and Condominium Project are
      in compliance with the following requirements. (A) Condominium Project Approval
      Status The Mortgagee must confirm the Condominium Project is not on the list
      of FHA- Approved Condominium Projects at the time of case number assignment.
      (B) Borrower Eligibility To be eligible for Single-Unit Approval, the Mortgagee
      must verify that the mortgage application receives an Accept from TOTAL Mortgage
      Scorecard or if manually underwritten, has a maximum Loan-to-Value (LTV) of
      90 percent. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured
      Housing Programs Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024)
      Handbook 4000.1 512 Last Revised: 11/26/2025 (C) Property Eligibility The Mortgagee
      must confirm that the Condominium Project: • has a CO or equivalent for all
      units in the Complete Condominium Project or Complete Legal Phase; • has a CO
      or equivalent for the subject Unit that was issued at least one year ago or
      has been occupied; • has at least five Units; • is not a Manufactured Home;
      • does not have Ineligible Characteristics; and • is not located in an Approved
      Condominium Project or unapproved phase of a Condominium Project with an approved
      Legal Phase. (D) Requirements for Eligible Properties (1) FHA Insurance Concentration
      (a) Definition FHA Insurance Concentration refers to the number of FHA-insured
      Mortgages within a Condominium Project. (b) Standard FHA may suspend the issuance
      of new FHA case numbers for a Mortgage on a Unit in a Condominium Project when
      the FHA Insurance Concentration exceeds 10 percent of the total number of Units
      in the Condominium Project for Condominium Projects with 20 or more Units. For
      Condominium Projects with less than 20 Units, the number of FHA-insured Mortgages
      cannot exceed two. (2) Single-Unit Approval Case Number Assignment (a) Standard
      After submitting the case number assignment to Holds Tracking in FHAC, the Mortgagee
      must submit required information for case number assignment by email to the
      FHA Resource Center at: answers@hud.gov. The issuance of an FHA case number
      for Single-Unit Approval processing is not a Condominium Project Approval of
      the Unit nor the Condominium Project. All required documents and verifications
      are to be reviewed and completed as loan level requirements by the Mortgagee.
      (b) Required Documentation The Mortgagee must submit an email to the FHA Resource
      Center with the information requested in form HUD-9991 in the following Sections:
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing
      Programs Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024)
      Handbook 4000.1 513 Last Revised: 11/26/2025 Mortgagee Information, Condominium
      Project Information, Condominium Association, and Occupancy Requirements by
      Construction Type, including the total number of Units in the Condominium Project
      for a case number assignment. Separate emails with the subject line “SUA Holds
      Tracking: Condominium Project Name” must be submitted for each case number requested.
      (3) Form HUD-9991, FHA Condominium Loan Level/Single-Unit Approval Questionnaire
      (a) Definition Form HUD-9991, FHA Condominium Loan Level/Single-Unit Approval
      Questionnaire, refers to a set of questions designed to collect pertinent loan,
      Condominium Project, and Unit information for FHA insurance endorsement. (b)
      Standard The Mortgagee must submit a completed, signed, and dated form HUD-9991.
      (4) Owner Occupancy Percentage (a) Definitions Owner Occupancy Percentage refers
      to the percentage of Units considered owner-occupied as shown in the calculation.
      (b) Standard The Mortgagee must determine that the Condominium Project has an
      Owner Occupancy Percentage of at least 50 percent of the total number of Units.
      The Mortgagee must report the Owner Occupancy Percentage in FHAC when the functionality
      becomes available. (c) Required Documentation The Mortgagee must submit form
      HUD-9991. (d) Calculation For the sole purposes of calculating the Owner Occupancy
      Percentage, the numerator of the calculation for a multi-phased Condominium
      Project includes the total number of the following Units in the first declared
      Legal Phase and cumulatively in subsequent Legal Phases, or for a single-phased
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing
      Programs Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024)
      Handbook 4000.1 514 Last Revised: 11/26/2025 Condominium Project, all of the
      following Units are included in the numerator of the calculation: • any Unit
      that is occupied by the owner as their place of abode for any portion of the
      calendar year and that is not rented for a majority of the calendar year; •
      any Unit listed for sale, and not listed for rent, that was previously occupied
      by the owner as their place of abode for any portion of the calendar year and
      that is not rented for a majority of the calendar year; or • any Unit sold to
      an owner who intends to occupy the Unit as their place of abode for any portion
      of the calendar year and has no intent to rent the Unit for a majority of the
      calendar year. For the sole purposes of calculating the Owner Occupancy Percentage,
      the following units are included in the denominator of the calculation for a:
      • multi-phased Condominium Project, the total number of Units in the first declared
      Legal Phase and cumulatively on subsequent Legal Phases; or • single-phased
      Condominium Project, all Units. A Unit owned by the builder/developer is not
      an owner-occupied Unit. (5) Recorded Documents (a) Definition Recorded Documents
      refer to the Condominium Project’s legal, project, and governing documents that
      are required to operate legally as required by state and local law. (b) Standard
      The Condominium Project’s Recorded Documents must be recorded in accordance
      with applicable state and local law to ensure the Condominium Project can be
      legally operated in the local jurisdiction. (c) Required Documentation The Mortgagee
      must submit evidence that the Recorded Documents have been recorded. (6) Transfer
      of Control (a) Definitions Transfer of Control refers to the shift of existing
      control over the Condominium Association from the developer/builder to the Unit
      owners. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured
      Housing Programs Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024)
      Handbook 4000.1 515 Last Revised: 11/26/2025 Control of the Condominium Association
      refers to the ability to directly or indirectly control, direct, modify, or
      veto any action of the Condominium Association. (b) Standard The Mortgagee must
      verify Control of the Condominium Association has been transferred to the Unit
      owners and the Covenants, Conditions, and Restrictions (CC&R) have been recorded.
      (c) Required Documentation The Mortgagee must submit form HUD-9991 and recorded
      CC&Rs. (7) Financial Condition (a) Financial Stability (i) Definitions Financial
      Stability refers to the ability of the Condominium Association to meet the Condominium
      Project’s needs in the future through positive cash flow and adequately funded
      reserves. (ii) Standard The Mortgagee must verify the Financial Stability of
      the Condominium Project and that: • the Condominium Association maintains separate
      accounts for operating and reserve funds; • a reserve account for capital expenditures
      and deferred maintenance that is funded with at least 10 percent of the aggregate
      of 12 months of Unit assessments, unless a lower amount is deemed sufficient
      based upon an acceptable reserve study; and • no more than 15 percent of the
      total Units are Units in Arrears (does not include late fees or administrative
      expenses). (iii) Required Documentation The Mortgagee must submit form HUD-9991.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing
      Programs Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024)
      Handbook 4000.1 516 Last Revised: 11/26/2025 (b) Financial Distress Event (i)
      Definition A Financial Distress Event refers to a Condominium Project or builder/developer
      that has: • sought protection under bankruptcy laws; • been placed into receivership
      (mandated or voluntary); • been subject to foreclosure or any seizure of assets
      by creditors; or • offered a Deed-in-Lieu (DIL) of Foreclosure. (ii) Standard
      The Mortgagee must verify that a Condominium Project has not experienced a Financial
      Distress Event within the last three years. (iii) Required Documentation The
      Mortgagee must submit form HUD-9991. If applicable, the Mortgagee must submit
      a dated legal document evidencing Resolution of Financial Distress Event and
      a signed and dated explanation. (c) Individual Owner Concentration (i) Definition
      Individual Owner Concentration refers to the percentage of Units owned by a
      single owner or Related Party. Related Party includes, but is not limited to:
      • an individual serving as the Unit owners’ officer, director, or employee;
      or • a Unit owner’s direct parent company, subsidiary, or any related entity
      with which the Unit owner shares a common officer or director. (ii) Standard
      The Mortgagee must determine that for Condominium Projects with 20 or more Units,
      the Individual Owner Concentration is 10 percent or less. The Mortgagee must
      determine that for Condominium Projects with fewer than 20 Units, the Unit owner
      may not own more than one Unit. No Related Party may own a Unit. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward
      Mortgages 8. Programs and Products - Condominiums (08/19/2024) Handbook 4000.1
      517 Last Revised: 11/26/2025 (iii) Required Documentation The Mortgagee must
      submit form HUD-9991. (iv) Calculation For the Individual Owner Concentration
      calculation: • on a multi-phased Condominium Project, the Individual Owner Concentration
      is calculated based on the total number of Units in the first declared Legal
      Phase and cumulatively on subsequent Legal Phases; or • for a single-phased
      Condominium Project, all Units are used in the denominator when calculating
      the Individual Owner Concentration, except that unoccupied and unsold Units
      owned by a builder/developer are excluded from the numerator and denominator
      in the Individual Owner Concentration calculation. The Mortgagee must use the
      total number of declared Units in the Condominium Project for Complete Condominium
      Projects and Gut Rehab to calculate the Individual Owner Concentration. (d)
      Commercial/Nonresidential Financial Independence (i) Definition Commercial/Nonresidential
      Financial Independence refers to the ability of the Residential Space and Commercial/Nonresidential
      Space of the Condominium Project to be independently sustainable such that neither
      portion of the Condominium Project is financially reliant on the other. (ii)
      Standard For projects with Commercial/Nonresidential Space, the Mortgagee must
      verify there is Commercial/Nonresidential Financial Independence. (iii) Required
      Documentation The Mortgagee must submit form HUD-9991. For Condominium Projects
      with Commercial/Nonresidential Space, the Mortgagee must submit: • a current
      year budget approved by the board(s); • a year-to-date income and expense statement
      dated within 90 Days if the prior year to date actuals are more than 90 Days
      old; • an income and expense statement for the previous year’s actual year end
      results; and II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured
      Housing Programs Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024)
      Handbook 4000.1 518 Last Revised: 11/26/2025 • a current balance sheet dated
      within 90 Days prior to the date of submission. (8) Insurance Coverage The Condominium
      Project where the single Unit is located must be insured to FHA standards as
      well as any applicable state and local condominium requirements. The insurance
      policies must list the Condominium Association as the named insured, or in the
      case of an affiliated Condominium Project or Condominium Association, the name
      of the affiliated Condominium Project or Condominium Association may be listed
      as a named insured. (a) Walls-In (HO-6) (i) Definition Walls-In Insurance refers
      to insurance that covers the interior of the Unit and Personal Property inside
      the Unit. (ii) Standard The Mortgagee must verify that the Borrower has obtained
      a Walls-In policy (HO-6) if the master or blanket policy does not include interior
      Unit coverage, including replacement of interior improvements and betterment
      coverage to insure improvements that the Borrower may have made to the Unit.
      (iii) Required Documentation The Mortgagee must submit form HUD-9991 and a certificate
      of insurance or complete copy of the insurance policy. (b) Hazard Insurance
      (i) Definition Hazard Insurance refers to insurance coverage that compensates
      for physical damage by fire, wind, or natural occurrences. (ii) Standard The
      Mortgagee must verify that the Condominium Association has a master or blanket
      Hazard Insurance policy in place for the entire Condominium Project. The Condominium
      Association’s master or blanket Hazard Insurance policy must be in an amount
      to fully cover the insurable II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      A. Title II Insured Housing Programs Forward Mortgages 8. Programs and Products
      - Condominiums (08/19/2024) Handbook 4000.1 519 Last Revised: 11/26/2025 replacement
      cost of all Units and all insurable Common Elements in the Condominium Project.
      The Mortgagee must verify that any policy with a coinsurance clause includes
      an agreed amount endorsement, selection of the agreed value option, or an amount
      of coverage to fully cover the insurable replacement cost of all Units and all
      insurable Common Elements in the Condominium Project. The Mortgagee must verify
      that any pooled insurance policy satisfies the insurance coverage standard for
      each Condominium Project insured under the policy. (iii) Required Documentation
      The Mortgagee must submit form HUD-9991, a certificate of insurance or complete
      copy of the insurance policy, and if applicable, acceptable evidence of the
      replacement cost value. (c) Liability Insurance (i) Definition Liability Insurance
      refers to insurance that protects against legal claims. (ii) Standard The Mortgagee
      must verify that the Condominium Association maintains comprehensive Liability
      Insurance for the entire Condominium Project, including all common areas, elements,
      public ways, and all other areas that are under its supervision, in the amount
      of at least $1 million for each occurrence. (iii) Required Documentation The
      Mortgagee must submit form HUD-9991 and a certificate of insurance or complete
      copy of the insurance policy. (d) Fidelity Insurance (i) Definition Fidelity
      Insurance refers to insurance that protects the Condominium Association against
      employee dishonesty, crime, or other fraudulent acts conducted by one or more
      employees. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured
      Housing Programs Forward Mortgages 8. Programs and Products - Condominiums (08/19/2024)
      Handbook 4000.1 520 Last Revised: 11/26/2025 (ii) Standard The Mortgagee must
      verify that for all Condominium Projects with more than 20 Units, the Condominium
      Association maintains Fidelity Insurance for all officers, directors, and employees
      of the Condominium Association and all other persons handling or responsible
      for funds administered by the Condominium Association. The Mortgagee must verify
      that the insurance coverage is the greater of either: • three months of aggregate
      (12-month) assessments on all Units plus reserve funds (up to the maximum permitted
      by state law); or • the minimum amount required by state law. For existing policies,
      an uninsured amount within 3 percent of the above calculation or $10,000, whichever
      is less, is acceptable. If the Condominium Project engages a management company,
      the policy or policies must demonstrate that they specifically meet the standard
      for both the Condominium Association and the management company. (iii) Required
      Documentation The Mortgagee must submit form HUD-9991 and the certificate of
      insurance or a complete copy of the insurance policy from the Condominium Association
      and/or from the management company. (e) Flood Insurance (i) Standard The Mortgagee
      must ensure that the Flood Insurance for a Condominium Unit meets the requirements
      in/under Flood Insurance for an FHA-insured Mortgage. The Mortgagee must verify
      that Units in a Condominium Project located in a SFHA meet the Flood Insurance
      requirements in the Condominium Project Approval section. (ii) Required Documentation
      The Mortgagee must submit form HUD-9991 and the required documentation in Condominium
      Project Approval. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title
      II Insured Housing Programs Forward Mortgages 8. Programs and Products - Condominiums
      (08/19/2024) Handbook 4000.1 521 Last Revised: 11/26/2025 (f) Exception for
      FHA Insurance Requirements The Mortgagee must verify that the Unit owners and
      Condominium Association or HOA comply with FHA insurance coverage requirements.
      (i) Detached Condominium Housing Project Eligibility If the governing documents
      require the Unit owners to maintain all applicable property insurance coverage
      for the dwelling, site area, and any Personal Property contained within, the
      DCHP Condominium Association or HOA is not required to maintain: • a blanket
      Hazard Insurance policy, provided the governing documents require the Unit owners
      to maintain individual Hazard Insurance (Walls-In); • a Liability Insurance
      policy, provided the governing documents require the Unit owners to maintain
      individual Liability Insurance; and • a Flood Insurance policy, provided the
      governing documents require the Unit owners to maintain individual Flood Insurance.
      The Condominium Association or HOA must carry master or blanket insurance for
      Structures/improvements that are considered common areas of the project outside
      the footprint of the individual site. (ii) Common Interest Housing Development
      Project If the governing documents require the Unit owners of the detached Single
      Family homes, Site Condominiums, duplex, or two- to-four units within the project
      to maintain and carry property insurance for the dwelling, site area, and any
      Personal Property contained therein, the Condominium Association or HOA is not
      required to maintain: • a blanket Hazard Insurance policy, provided the governing
      documents require the Unit owners to maintain individual Hazard Insurance; •
      a Liability Insurance policy, provided the governing documents require the Unit
      owners to maintain individual Liability Insurance; and • a Flood Insurance policy,
      provided the governing documents require the Unit owners to maintain individual
      Flood Insurance. The Condominium Association or HOA must maintain and carry
      master/blanket Hazard, Liability, and Flood Insurance for the Structures that
      contain the attached units and the common areas of the project. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward
      Mortgages 8. Programs and Products - Condominiums (08/19/2024) Handbook 4000.1
      522 Last Revised: 11/26/2025 (iii) Required Documentation The Mortgagee must
      submit form HUD-9991 and certificates of insurance or complete copies of the
      insurance policies. (9) Projects in Coastal Barrier Resources System or Special
      Flood Hazard Areas (a) Projects in Coastal Barrier Resources System If any part
      of the Condominium Project is located within the Coastal Barrier Resources System
      (CBRS), the Condominium Project is not eligible for FHA Single-Unit Approval.
      (b) Special Flood Hazard Areas If any portion of the Structures or equipment
      essential to the value of the Condominium Project is located within an SFHA,
      then the Condominium Project is not eligible for Condominium Project Approval,
      unless the Condominium Project meets the Special Flood Hazard Areas requirements
      in the Condominium Project Approval section. (10) Commercial/Nonresidential
      Space (a) Definitions Commercial/Nonresidential Space refers to floor area allocated
      to: • retail and commercial square footage (excludes Live/Work Units); • multilevel
      parking garage square footage that is separate from multilevel parking garage
      square footage allocated to residential Unit owners; • building common areas
      not reserved for the exclusive use of residential Unit owners; and • any square
      footage that is owned by a private individual or entity outside of the Condominium
      Association. Residential Space refers to floor area allocated to: • all Unit
      square footage; • all building common area square footage exclusively for the
      use of residential Unit owners; and • all parking garage square footage allocated
      to residential Unit owners. Parking lot square footage is not considered Residential
      or Commercial/Nonresidential Space. Total Floor Area refers to all Residential
      Space and Commercial/Nonresidential Space. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      A. Title II Insured Housing Programs Forward Mortgages 8. Programs and Products
      - Condominiums (08/19/2024) Handbook 4000.1 523 Last Revised: 11/26/2025 (b)
      Standard The Mortgagee must verify that the Condominium Project’s Commercial/Nonresidential
      Space does not exceed 35 percent of the Condominium Project’s Total Floor Area.
      (c) Required Documentation The Mortgagee must submit the following documentation:
      • form HUD-9991; • recorded condominium site plans; and • recorded CC&Rs. (11)
      Live/Work Unit (a) Definitions A Live/Work Condominium Project refers to a Condominium
      Project that allows space within the individual Unit to be used jointly for
      nonresidential and residential purposes. A Live/Work Unit refers to a Unit in
      a Live/Work Condominium Project. (b) Standard The Mortgagee must verify that
      the Condominium Project governing documents allow Live/Work arrangements. The
      Mortgagee must verify that the individual Live/Work Unit does not contain more
      than 49 percent Commercial/Nonresidential Space. (c) Required Documentation
      The Mortgagee must submit form HUD-9991. (12) Leasehold Interest (a) Definition
      Leasehold Interest refers to real estate where the residential improvements
      are located on land that is subject to long-term lease from the underlying fee
      owner, creating a divided estate in the Property. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      A. Title II Insured Housing Programs Forward Mortgages 8. Programs and Products
      - Condominiums (08/19/2024) Handbook 4000.1 524 Last Revised: 11/26/2025 (b)
      Standard The Mortgagee must determine if Condominium Projects with Units or
      Common Elements owned under a Leasehold Interest are eligible and meet the following
      requirements: • The Condominium Association must be the lessee under the lease.
      • The lease of the Common Elements provides that a default of the Condominium
      Association does not result in a disturbance of any rights of the Unit owners.
      • The lease provides that the Mortgagee receives notice of any monetary or Non-Monetary
      Default by the Condominium Association and is given the right to cure any defaults
      on behalf of the Condominium Association. • The lease provides for the payment
      of taxes and insurance related to the land, in addition to those being paid
      for the improvements. • The Condominium Association must not be in default under
      any provisions of the lease. • The lease does not include any default provisions
      that could result in forfeiture or termination of the lease except for nonpayment
      of lease rents. • The Condominium Project must comply with the Title II or Home
      Equity Conversion Mortgage (HECM) Leasehold guidance as applicable. (c) Required
      Documentation The Mortgagee must submit the lease and comply with the required
      documentation in the Leasehold guidance. (13) Litigation (a) Definition Litigation
      refers to a current or pending lawsuit or proceedings in a court, arbitration,
      or mediation involving the Condominium Project or Condominium Association, or
      those concluded within 12 months of the application date. Litigation does not
      include foreclosure or actions to collect past due assessments brought by the
      Condominium Association or Condominium Project as plaintiff. (b) Standard The
      Mortgagee must verify that the Condominium Project or Condominium Association
      is not subject to Litigation that relates to the safety, structural soundness,
      habitability, or functional use of the Condominium Project. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward
      Mortgages 8. Programs and Products - Condominiums (08/19/2024) Handbook 4000.1
      525 Last Revised: 11/26/2025 The Mortgagee must verify that the Condominium
      Project or Condominium Association is not subject to any other Litigation risk
      not covered by insurance or that exceeds the amount of insurance coverage relating
      to the potential losses for that matter. (c) Required Documentation The Mortgagee
      must submit form HUD-9991. iv. Site Condominium (A) Definition A Site Condominium
      refers to: • a Condominium Project that consists entirely of Single Family detached
      dwellings that have no shared garages, or any other attached buildings; or •
      a Condominium Project that: o consists of Single Family detached or horizontally
      attached (townhouse- style) dwellings where the Unit consists of the dwelling
      and land; o does not contain any Manufactured Housing Units; and o is encumbered
      by a declaration of condominium covenants or a condominium form of ownership.
      (B) Standard The Unit owner must be responsible for all required insurance and
      maintenance costs associated with the Unit dwelling, excluding landscaping,
      of the Site Condominium. Site Condominiums do not require Condominium Project
      Approval or Single-Unit Approval. (C) Required Documentation The Mortgagee must
      submit the following documentation: • Condominium Rider; • appraisal completed
      on Fannie Mae Form 1073/Freddie Mac Form 465, Individual Condominium Unit Appraisal
      Report, evidencing that all Units satisfy the Site Condominium definition; •
      certificate of Hazard Insurance or complete copy of the insurance policy evidencing
      coverage of the entire dwelling; and • if required under the Flood Insurance
      requirements in the Condominium Project Approval Section, certificate of Flood
      Insurance or complete copy of the insurance policy evidencing coverage of the
      entire dwelling. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II
      Insured Housing Programs Forward Mortgages 9. 203(k) Consultant Requirements
      Handbook 4000.1 526 Last Revised: 11/26/2025 9. 203(k) Consultant Requirements'
  judgment: false
