Two buyers with identical credit, income and down payment can get opposite answers on the same building. The difference is not the borrower. It is the project. FHA, VA and the conventional secondary market each review the condominium itself, and a building that fails that review cannot be financed with that product at any price. Here is how each review works, which criteria actually sink projects, and how to check a specific Richmond building before you write an offer.
Why the lender underwrites the building as well as the borrower
When you buy a condominium you buy a unit plus an undivided interest in common elements you do not control. Your collateral depends on an association you did not choose: its budget, its reserves, its insurance, its litigation and its ability to collect from neighbors. If the association fails, the unit is hard to sell and the lender is holding a loan on something illiquid.
So each investor sets project standards. FHA insures a condominium loan under Section 203(b) of the National Housing Act only where the unit sits in an FHA-approved project or qualifies under the single-unit route; the current framework came from the Condominium Project Approval Final Rule, effective 15 October 2019, and lives in Section II.C of HUD Handbook 4000.1. VA keeps its own approved list. Fannie Mae runs project review through its Selling Guide. Three different gates, and clearing one does not clear the others.
This is a different question from personal underwriting. If you are still working through that side, our post on what lenders look at besides your credit score covers DTI, reserves and job history.
How FHA condominium approval works
An FHA-approved project has been reviewed as a whole and placed on HUD’s list, either by HUD itself (HRAP) or by a lender with delegated authority (DELRAP). Approval carries an expiration date and must be recertified. To be eligible the project must be complete and in full compliance with applicable state law, and it must meet HUD’s requirements on insurance coverage, financial condition, nature of title, pending legal action and physical condition.
Nothing about the approval attaches to you. It attaches to the building, and it can lapse while you are under contract.
The single-unit approval route
Since the 2019 rule, FHA can insure a loan on a unit in a project that is not approved, if the unit qualifies for Single-Unit Approval. Per Mortgagee Letter 2019-13 and the HUD condominium page, the project must not be FHA-approved, must be complete and ready for occupancy, must have at least five dwelling units, and must not be a manufactured home project. It must also satisfy a subset of the full project requirements: FHA insurance concentration, owner-occupancy percentage and financial condition.
Two hard caps matter. Single-Unit Approvals are limited to 10 percent of the total units in a project. In projects with fewer than 10 units, the number of FHA-insured mortgages cannot exceed two. Your lender requests the case number and submits Form HUD-9991 for review, so this is not a same-day answer.
How VA approval works, and why it is a separate list
VA maintains its own roster of approved condominium projects. FHA approval does not transfer to VA and VA approval does not transfer to FHA. If a project is not on VA’s list, it has to be submitted to VA for review against VA’s requirements before a VA-guaranteed loan on a unit there can close.
The practical consequence for a Richmond buyer using VA entitlement is timing. Submission and review take weeks, not days, and a seller working a short contract will not wait. Ask before you write, not after. You can pull a customized report from the VA Loan Guaranty condo report tool.
The criteria that actually sink a project
Projects rarely fail for exotic reasons. They fail on six or seven recurring items. The figures below are the ones published in regulation or guidance; where a specific threshold is set by HUD notice inside Handbook 4000.1 rather than in the regulation, we say so instead of guessing a number.
| Criterion | What is measured | Published standard |
|---|---|---|
| Owner-occupancy ratio | Share of units occupied as a principal or secondary residence, or sold to owners who intend to occupy | Under 24 CFR 203.43b(d)(6)(ix) the FHA minimum must fall between 30 and 75 percent of total units; HUD sets the specific figure by notice |
| FHA insurance concentration | Share of units already carrying FHA-insured mortgages | Must fall between 25 and 75 percent of total units; HUD may suspend issuing new case numbers once the maximum is exceeded |
| Commercial space share | Nonresidential square footage divided by total square footage | The FHA maximum must fall between 25 and 55 percent of total floor area, and the space must not undermine the project’s residential character |
| Reserve funding | Money set aside for capital components and deferred maintenance | FHA: the reserve account must hold at least 10 percent of the monthly unit assessments unless a lower figure is justified by an acceptable reserve study. Fannie Mae’s full review: at least 10 percent of the budget allocated to replacement reserves |
| Dues delinquency | Units behind on common expense assessments | FHA’s Form HUD-9992 defines “units in arrears” as more than 60 days past due. Fannie Mae will not accept a project where more than 15 percent of units are 60 days or more past due |
| Single-investor concentration | Units owned by one entity or related owners | Fannie Mae treats a project as ineligible above 20 percent in projects of 21 or more units, or above 2 units in projects of 11 to 20 units, or above 2 units in 5 to 10 unit projects that are part of a master association |
| Pending litigation | Suits involving the association or the project | FHA asks whether the litigation relates to safety, structural soundness, habitability or functional use, and whether insurance would cover a judgment. Fannie Mae treats projects in need of critical repairs or significant deferred maintenance as ineligible |
| Insurance | Master hazard, liability, fidelity and flood coverage | FHA requires comprehensive liability coverage of at least $1 million for any single occurrence, plus hazard, fidelity and, in a flood hazard area, flood coverage |
What “non-warrantable” means on a conventional loan
“Warrantable” is shorthand for a project that meets Fannie Mae or Freddie Mac standards so the loan can be sold into the secondary market. Non-warrantable means it does not, usually for one of the reasons in the table above, or because the project carries an “Unavailable” status in Fannie Mae’s Condo Project Manager, which makes the loan ineligible for purchase outright.
If a building you want is non-warrantable, the options are narrower but real:
- Portfolio lending. Some banks and credit unions keep condominium loans on their own books and set their own project rules. Expect a larger down payment, often 20 to 25 percent, and pricing above conventional.
- Fix the defect. Several disqualifiers are temporary. A litigation matter settles, an investor sells down, a reserve allocation is corrected at the next budget. Ask the board what is being done and when.
- Change product. A project that fails conventional review may still hold FHA approval, or qualify for single-unit approval. It works the other way too.
- Walk. Whatever blocks your loan will block your buyer’s loan later. A building only a cash buyer can purchase prices like one.
Run the payment difference before you decide. Our mortgage calculator will show you what a portfolio rate and a larger down payment actually cost over the years you plan to own.
How to check a specific Richmond building before you write an offer
This takes about thirty minutes and it is the single highest-value half hour in a condominium purchase.
- Search HUD’s condominium list. Use the FHA condominiums lookup at entp.hud.gov. You can search by project name or by state and county, so “Virginia / Richmond City” or “Virginia / Henrico” will show you what exists. Read the status and the expiration date, not just the presence of a record. An expired approval has to be recertified before an FHA loan can close on it.
- If it is not listed, ask about single-unit approval. Confirm with your loan officer that the project has at least five units, is complete, is not manufactured housing, and is inside the 10 percent single-unit cap, or the two-loan cap if the project has fewer than 10 units.
- Pull the VA report separately. Request a customized condo report from the VA Loan Guaranty hub. Do not assume FHA status tells you anything about VA status.
- Ask your lender to check Condo Project Manager. For a conventional loan, CPM status is the gate. Fannie Mae also publishes a free Condo Status Finder that lets an association see how it stands against project requirements, which is a reasonable thing to ask a board to run.
- Order the resale certificate immediately. Under Virginia’s Resale Disclosure Act, the certificate must state any known project approvals currently in effect from secondary mortgage market agencies, along with the budget, the reserve study, the delinquency picture, pending litigation and the insurance deductible. It is the most complete single document you will get. Our guide to the Virginia condominium resale certificate covers how to request it and the deadlines that follow.
- Read the master insurance certificate. Confirm the liability limit and find the deductible. A high master deductible is a financing question and a personal exposure question at the same time.
- Get the answer in writing before your financing contingency expires. “The building is probably fine” is not an underwriting decision. Ask for the project review outcome in an email.
Where Richmond’s condominium stock actually sits
Most of this metro is detached housing, and most of the condominium inventory is inside the city. The converted warehouses and mills in Manchester and Shockoe Bottom account for a large share of it, with newer attached and mixed-use construction around Scott’s Addition and mid-century elevator buildings scattered through the rest of the City of Richmond. Those three categories have different failure modes: conversions carry envelope and roof risk and sometimes commercial space on the ground floor, newer buildings carry investor concentration and thin operating history, and older elevator buildings carry reserve and equipment risk.
Richmond City: 218 closed sales (+6.9%), 17 days on market, $450,000 median (-3.4%), 1.5 months supply.
Richmond Metro: 1,049 closed sales (+0.5%), 19 days on market, $460,000 median (+2.2%), 1.8 months supply.
City-level and metro-level single-family figures, not condominium or neighborhood medians. For the attached segment see our Richmond condo and townhouse market report, July 2026. Source: Central Virginia Regional MLS, via the Richmond Association of REALTORS, July 2026, current as of 10 August 2026.
[DATA NEEDED: median price per square foot, July 2026, by area]
If you are shopping the entry band, our post on Richmond condos and townhomes between $300K and $350K pairs with this one, and a building’s assessment history sits in our guide to special assessments in a Richmond condo or townhome. Start narrowing buildings on our property search, or browse areas through our Richmond communities guide. When you have a shortlist, our preferred lenders can run project review on each address before you tour.
Frequently asked questions
If the building is FHA-approved, does that mean my loan is approved?
No. Project approval is one gate of three. You still have to qualify as a borrower, and the unit, the appraisal and the title still have to meet requirements. A project on the list simply means the condominium itself is not the obstacle.
Can a condominium’s approval expire while I am under contract?
Yes. FHA project approvals carry an expiration date and have to be recertified. Read the expiration date in the lookup, not just the fact that a record exists, and confirm the status again before your financing contingency runs out.
Do townhomes need project approval?
Usually not, if you are buying a fee-simple lot in a planned unit development or HOA rather than a condominium unit. At Fannie Mae, evaluation of most PUD projects is a lender-delegated function. If your deed conveys a condominium unit, condominium rules apply no matter what the building looks like from the street.
What about a detached house that is legally a condominium?
FHA’s regulation defines a Site Condominium: a project of single-family detached dwellings with no shared garages or attached buildings, or of detached or horizontally attached townhouse dwellings where the unit consists of the dwelling and the land. Ask your lender how that project type is processed, because it is not handled the same way as a standard condominium review.
Can an association apply for FHA approval on its own?
Yes. Form HUD-9992 lists the eligible submitters as the condominium association, a mortgagee, an attorney acting as agent, a project consultant, a management company, a builder or a developer. If a Richmond building keeps losing FHA buyers, the board can start the process itself.
Does a special assessment automatically make a building non-warrantable?
No. An assessment on its own is not disqualifying. The problem arises when the condition behind it amounts to critical repairs or significant deferred maintenance, which Fannie Mae treats as making a project ineligible, and some Fannie Mae new-project criteria require that there be no active or pending special assessments.
Are very small condominium projects reviewable at all?
Yes, with their own questions. FHA’s questionnaire for two to four unit projects asks whether state law requires an annual budget or annual financial statements and whether the project is 75 percent owner occupied. Small projects also hit the FHA single-unit caps fastest, since a project with fewer than 10 units can carry no more than two FHA-insured mortgages.
