Why do lenders review the condo project?
When you buy a condo, you own your unit and share the common areas with the other owners through an association. So along with your credit and income, the lender checks that the project itself is sound.
Fannie Mae's project standards, for example, look at the project's financial health, condition and marketability, how much control the unit owners have, any litigation, insurance coverage and restrictions on selling units. How deep the review goes depends on the project: Fannie Mae waives most of it for detached condos and projects of two to ten units, and requires a full review for larger established projects and new projects.
What is the association questionnaire?
To answer those questions, lenders usually send the association or its management company a questionnaire about the budget, insurance, any lawsuits, how many units are owner-occupied and whether part of the building is commercial space. Ask for it early in your contract period, since the answers can take a while to come back.
What is FHA condo approval?
FHA insures loans on condos in FHA-approved projects. You can check a project on HUD's FHA-approved condo search before you write an offer, or start with Tom's list of FHA-approved condos in southern NH, by town.
If the project isn't on the list, a single unit may still qualify through FHA's single-unit approval. HUD requires the project to be complete, to have at least five units and not to be manufactured housing, and checks a shorter list of standards, including how many units already have FHA loans, owner-occupancy and the association's finances. See the FHA guide for how FHA loans work.
What if a project doesn't meet the standards?
A project that doesn't meet Fannie Mae, Freddie Mac or FHA standards may still be financeable through lenders that keep loans in their own portfolio or offer non-QM loans. Terms vary by lender. As a broker, Elite Mortgage Group can compare those options. How a broker works.
How do association dues affect my budget?
Monthly association dues count in your payment when a lender figures what you qualify for, alongside principal, interest, taxes and insurance. Ask whether any special assessments are planned. The association's master policy insures the building; you'll usually carry your own condo policy (often called HO-6) for the inside of your unit. Add the dues to the payment calculator estimate to see the full picture.
What insurance does a condo owner need?
The association carries a master policy on the buildings and common areas, and the lender checks that it meets the loan program's rules. The master policy may not cover the inside of your unit. Under Fannie Mae's rules, you need your own unit owner policy, often called an HO-6, when any part of the unit's interior or improvements isn't covered by the master policy, or when the master policy has a deductible charged to each unit.
Ask the association for the master policy's coverage summary and deductible early, and share it with your insurance agent so your own policy fills the gaps. If the building is in a flood zone, flood insurance comes into it too; see flood zones on the Seacoast.
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Sources
- HUD, FHA Condominiums
- HUD, Search for FHA-approved condominiums
- Fannie Mae Selling Guide B4-2.1-01, General Information on Project Standards
- Fannie Mae Selling Guide B7-3-04, Property Insurance Requirements for Individual Units in a Project Development
- Fannie Mae Selling Guide B7-3-03, Master Property Insurance Requirements for Project Developments
Checked October 2026. Limits and program rules change, so confirm current figures before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.