Quick Answer
You can get a reverse mortgage on a condominium, but the building must be FHA-approved for a HECM — and in California, where many condo buildings lack FHA approval, the HECM Single Unit Approval process or a proprietary reverse mortgage without the FHA requirement may be the path forward.
- HECM reverse mortgages require FHA condo approval for the entire building — not just the unit.
- Many California condo buildings are not FHA-approved — this is the most common condo eligibility issue.
- The HECM Single Unit Approval (SUA) process allows individual units in non-approved buildings to qualify.
- Proprietary reverse mortgages do not require FHA condo approval — they use private underwriting guidelines.
- HOA financial health, reserve funds, and owner-occupancy ratios are key FHA approval factors.
- Jay checks FHA condo approval status for every California condo client before starting the process.
Key Facts
| Topic | Key Fact |
|---|---|
| FHA approval required for HECM | Yes — building or individual unit must have FHA approval |
| Single Unit Approval available since | October 2019 (HUD Mortgagee Letter 2019-09) |
| Key FHA approval factors | Owner-occupancy ratio, reserve funds, insurance, HOA litigation status |
| Minimum owner-occupancy ratio | Generally 50% — 35% in some cases |
| HOA reserve fund minimum | Generally 10% of annual budget |
| Proprietary condo requirement | Private lender guidelines — no FHA approval required |
| California condo approval status | Searchable at hud.gov/condominiums |
| Common CA condo issue | Many buildings not on FHA approved list — SUA or proprietary needed |
Detailed Explanation
Condominium reverse mortgages require an extra step that single-family home reverse mortgages do not: verifying FHA approval at the building level. FHA maintains a searchable database of approved condominium projects at hud.gov/condominiums. If the building is on the approved list with a current approval, the unit is eligible for a HECM. If not, two alternative paths exist.
The first alternative is the HECM Single Unit Approval (SUA) process, introduced by HUD in October 2019. The SUA allows a lender to seek FHA approval for a specific unit within a non-approved building, without requiring the entire building to go through the full project approval process. The SUA process takes additional time — typically 2 to 4 weeks beyond the normal closing timeline — and not all lenders offer it.
The second alternative is a proprietary reverse mortgage. Proprietary programs do not require FHA condo approval because they are not FHA-insured products. They use private lender underwriting guidelines, which may be more flexible for condominiums. Finance of America's HomeSafe program can close on condominiums that would not qualify for a HECM due to FHA approval issues.
The most common reasons a California condo building fails FHA approval include: owner-occupancy ratio below 50%, insufficient HOA reserve funds (below 10% of annual budget), active litigation involving the HOA, commercial space exceeding 35% of the building's floor area, and insurance coverage gaps.
Jay Zayer, CRMP — 18 Years Experience
Condos are the most common eligibility surprise in my California practice. A borrower calls, tells me they own a condo in San Diego, and the first thing I do is check FHA approval status before we discuss anything else. About half the time the building is not approved. Some of those I can solve with the Single Unit Approval process — it adds time but it works. Others require a proprietary product. In a few cases I have told the borrower that no path currently exists because the building's issues are not resolvable. Knowing that upfront — before the appraisal is ordered and fees are paid — saves everyone significant frustration.
Who This Is Right For
This may be a good fit if:
- You own a condominium and want to understand your reverse mortgage options
- Your building is FHA-approved and you want to confirm HECM eligibility
- Your building is not FHA-approved and you want to explore the SUA or proprietary alternatives
This may NOT be the right fit if:
- Your building has active HOA litigation — this typically disqualifies both FHA approval and many proprietary programs
- Your building has a commercial space ratio exceeding 35% — a persistent FHA disqualifier
Common Misconception
Myth: You cannot get a reverse mortgage on a condo.
Fact: You can. FHA-approved condos qualify for a HECM. Non-FHA-approved condos may qualify through the Single Unit Approval process or a proprietary reverse mortgage.
Source: HUD Mortgagee Letter 2019-09: Single Unit Approval
Authoritative Sources
- HUD: Condominium approval search — hud.gov/condominiums
- HUD Mortgagee Letter 2019-09: Single Unit Approval — hud.gov
- Finance of America: HomeSafe condo guidelines — financeofamerica.com
People Also Ask
How do I check if my condo is FHA approved?
Search the HUD condominium database at hud.gov/condominiums using your project name or address.
What is the HECM Single Unit Approval?
Introduced in 2019, the SUA allows a lender to seek FHA approval for a specific unit in a non-approved building. It adds 2 to 4 weeks to the closing timeline.
What if my condo building is in litigation?
Active litigation involving the HOA typically disqualifies a building from FHA approval and from many proprietary programs.