Skip to Main Content
Services Talent Knowledge
Site Search


Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

September 9, 2019

HUD's Final Rule on FHA-Insured Condos

The Department of Housing and Urban Development’s (HUD) Final Rule published on August 15, 2019, has relaxed the Federal Housing Authority’s (FHA) regulations regarding condominium financing, making it easier and more affordable for qualified homebuyers to purchase condominium units with an FHA-insured mortgage loan.

Historically, qualified homebuyers could only purchase a condominium unit using an FHA-insured loan if the unit was located in a condominium project previously approved by the FHA. Under the Final Rule, qualified homebuyers of condominium units in unapproved projects where a minimum of 50 percent of the units are owner-occupied and the entire condominium project is complete will now have similar access to FHA-backed loans subject to the following conditions:

  • In a condominium with fewer than 10 units, no more than two can be insured by the FHA.
  • In a condominium with 10 or more units, a maximum of 10 percent can be FHA insured. However, the Final Rule provides that the HUD may vary the specific limit to respond to market needs.

These changes will expand the number of condominium units available to qualified homebuyers and will make FHA-insured loans, which have less restrictive requirements than conventional loans, more accessible.

Additionally, the Final Rule relaxes owner-occupancy criteria. Condo owners who only live in their unit part time or rent out their unit for less than a majority of the year are now deemed to satisfy the FHA’s owner-occupancy requirement. This will make it easier for unapproved condominiums to meet the minimum 50-percent owner-occupancy threshold, allowing more single units to be purchased with FHA-insured loans.

The Final Rule also allows more mixed-use projects to be eligible for FHA insurance. Specifically, the Final Rule increases the amount of commercial space that may be included in a condominium project in order to obtain FHA approval, thereby allowing for more FHA-insured mortgage financing for residential units. For instance, mixed-use projects can now have commercial space up to 35 percent of the project’s total floor space. Allowing more commercial space in condominium projects will increase mixed-use project development, leading to more FHA-insured condominium units being brought to market.

The Final Rule goes into effect on October 15, 2019.

If you have any questions regarding the content of this alert, please contact Corey Auerbach, partner, at or Kevin Barone, associate, at or another member of the firm’s Real Estate or Financial Institutions & Lending Practice Areas.


Click here to sign up for alerts, blog posts, and firm news.

Featured Media


NYS Siting Board Grants Developer's Petition for Relief From County's Unreasonable Delay


Horseback Rider Assumes Risk of "Green Broke" Horse


New York Adult Survivors Act Set to Expire


NYS Appellate Court Reverses in Favor of Policyholder in Ensuing Loss Case


Temporary Health Care Staffing Agencies Can No Longer Charge for Hiring Their Personnel


The First Department Addresses When a Party Is Entitled to Treble Damages Pursuant to Judiciary Law §487

This site uses cookies to give you the best experience possible on our site and in some cases direct advertisements to you based upon your use of our site.

By clicking [I agree], you are agreeing to our use of cookies. For information on what cookies we use and how to manage our use of cookies, please visit our Privacy Statement.

I AgreeOpt-Out