Condominiums

Quick Takeaways

Condos can serve as an affordable homeownership option, particularly for first-time buyers, seniors, and families living in high-cost areas.
When purchasing a condo, be sure to include monthly condo fees in your mortgage calculations and budget for likely fee increases over time.
Ensure the condo building is approved for your financing type.

New to the condo market? Condominiums can serve as an affordable homeownership option, particularly for first-time buyers, seniors, and families living in high-cost areas. Learn helpful buying tips to make the most of this homeownership opportunity.

What am I buying? When you buy a condo, you own your individual unit while sharing ownership of common areas with other residents. Condos are operated by homeowners' associations (HOAs) that maintain these shared spaces, enforce community rules, and collect monthly condo fees to cover maintenance, operations, and building amenities.

Important factors to consider when purchasing a condo. When budgeting for your purchase, remember that HOA fees are likely to increase over time. Also confirm that the condo building is approved for the type of financing you plan to use (see Featured Links below). During the underwriting process, lenders will review both your financial information and the financial health of the condo association, including whether it has sufficient reserves. Recent changes following high-profile building failures have led to updated requirements from Fannie Mae and Freddie Mac that may affect condo transactions. Homebuyers should ask if the building has been inspected for structural issues and if there are looming special assessments.

Learn more. Expand your knowledge of condominiums through our list of curated websites. Get information from sources such as HUD, IREM, Fannie Mae and Freddie Mac.

See References for more information.

Featured

Featured Links

FHA Final Condo Rulepdf

NAR Assessment: FHA Final Condo Rule

Approval Checklist for Existing Condominium Projects

FHA Condo Lookup

VA Condo Approval

Condo Financing Guides

Fannie Mae Condominium Processes

Freddie Mac Condominium Processes

FHA Single Family Housing Policy Handbook - Condo Project Approvalpdf

FHA Condo Rule: Its Impact on REALTORS® and Consumers

video

September 27, 2019

Hear NAR staff discuss the long-awaited FHA Condo Rule and its impact on REALTORS® and consumers.

Advocacy

What is the fundamental issue?

Condominiums are a popular and often more affordable purchasing option, especially for for seniors and first-time homebuyers. Because condos are typically more affordable than single-family homes, they provide an opportunity for homebuyers struggling to enter a low-inventory market. While FHA implemented rule changes in 2019 that made it easier for buyers to use FHA loans for condominiums, current approval requirements continue to limit these affordable homeownership opportunities.

I am a real estate professional. What does this mean for my business?

The current FHA condominium rules create both opportunities and challenges for your condo-buying clients. While the 2019 rule changes expanded access through single-unit approval (also called "spot approval"), key restrictions remain: at least 50% owner-occupancy, adequate reserve funding (at least 10% of assessments), maximum 35% commercial space, and no more than 15% of units being delinquent on assessments. These requirements can limit financing options for your clients.

NAR Policy

Condominiums continue to be one of the most affordable homeownership option for many first-time buyers, small families, single people, and older Americans. NAR supports improving FHA's condominium rules to expand market opportunities for both buyers seeking affordable properties and homeowners looking to sell their units.

Opposition Arguments

Some argue that condominiums carry inherently higher risks than single-family homes due to shared ownership structures and potential for concentrated foreclosures affecting building values. They contend that rental units and investor ownership pose additional risks since renters and investors may not maintain properties as well as owner-occupants, supporting current occupancy and ownership restrictions to reduce federal risk exposure.

Legislative/Regulatory Status/Outlook

FHA implemented new condominium rules in 2019 that reduced owner-occupancy requirements for some properties, raised commercial space limits, and expanded single-unit approval processes. NAR continues advocating for FHA to revisit these policies to further expand inventory available to buyers with government-insured mortgages. Specifically, NAR advocates for: increasing allowable commercial space from the current 35% limit to enable buyers to take advantage of properties in higher opportunity and densely populated areas; decreasing the 50% owner-occupancy requirement and instead using financial solvency as the primary approval criterion; and increasing single investor ownership limits (currently one unit for buildings under 20 units, and 10% for larger buildings) as investors have entered the residential marketplace at faster rates.

NAR Committee

Federal Financing and Housing Policy Committee

Current Legislation/Regulation

None at this time

In-Depth

Issue Summary

Letters to Congress - FHA Condo Financing

Letters to Federal Agencies - FHA Condo Financing

Letters to Federal Agencies - Condominiums

Congressional Testimonies - FHA Condo Financing

NAR Federal Issues Tracker

Legislative Contact(s):

Matt Emery
memery@nar.realtor
202-383-1212

Caitlin Vannoy
cvannoy@nar.realtor
202-383-1127

Elayne Weiss
eweiss@nar.realtor
202-383-1084

Regulatory Contact(s):

Ken Fears
kfears@nar.realtor
202-383-1066

Caitlin Vannoy
cvannoy@nar.realtor
202-383-1127

Elayne Weiss
eweiss@nar.realtor
202-383-1084

References

NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.

Condos: The Basics

Condos: Everything You Need to Know (Rocket Mortgage, Dec. 21, 2023)

Condo owners are responsible for what goes on within their individual units, including maintenance and repairs. Beyond that, they’re required to pay regular fees to a condo association. Those fees contribute to the maintenance of the shared common areas, building amenities and the exterior of the complex.

Should I Buy a Condo? The Pros and Cons (realtor.com®, Jan. 9, 2023)

Condominiums can be a good investment, especially if they allow you as a buyer to enter the real estate market. Qualifying for financing is much the same as getting a mortgage for a single-family home. If you are purchasing condos as investment properties, you should be able to find a lender as well.

Condo Buyer's Guide (Fannie Mae)

“Condos represent a community form of ownership. In addition to your monthly mortgage payment, local property taxes (in most areas), and insurance costs, you will pay a condo fee that may also be referred to as “homeowners’ association” (HOA) dues or fees.”

How to Buy a Condo (Business Insider, Mar. 27, 2025)

“Condo living can be a great fit for the right buyer. There's less maintenance, it's often more affordable, and you often get access to special amenities, like a pool, gym, or dog park. Still, it's different from what traditional single-family homes have to offer. You don't have your own dedicated lot, you share walls (and amenities) with many neighbors, and you have to answer to a community association when making changes to — or even decorating — your property. Condos are a unique type of property, so understanding them is key before you opt to buy one.”

What is a Condo? Everything You Need to Know to Buy One (Redfin Mar. 4, 2025)

“Buying a condo is quite similar to buying a home, as you’ll work with a realtor and loan officer to purchase your home. However, you’ll need to do an advanced investigation into the HOA, which you likely wouldn’t need to do if you were buying a home. Condos offer great advantages as an investment; however, they often appreciate at lower rates than single-family homes. This is of course dependent on the specific location and housing market. To ensure you get the most out of your investment, you need to dig deep before you buy. With any home buying process, you should be doing a lot of research and be aware of any red flags when buying a condo. Since it’s difficult to do this research alone, this is another reason why working with a condo specialist is always a good idea.”

Consumer Guide: Understanding Condo Ownership (National Association of REALTORS®)

“For aspiring home buyers, a condominium can be an attractive option. Condos are typically more affordable than single family homes and require less maintenance, and they’re often situated near shops, entertainment, and transportation. If you’re considering a condo purchase, here’s a primer that will help you evaluate your options and maximize the enjoyment of your new home.”

Home Owners Associations (HOAs) and Fees

What To Know About Condo Associations: Your Guide to Rules, Fees and Insurance (Rocket Mortgage, Aug. 21, 2025)

Similar to an HOA, your condo association will collect regular dues from you and other association members to cover basic operating expenses. These fees are known as common charges. How much you pay in monthly, quarterly or annual charges will depend on the location and size of your condominium complex and the amenities your association offers.

In addition to common charges, your association may occasionally need to collect a one-time fee called a special assessment for unexpected costs.

Understanding Condo Fees Vs. HOA Fees: Differences and Similarities (Quicken Loans, Aug. 4, 2023)

“When amenities include lush courtyards, state-of-the-art fitness centers or a 24/7 door attendant, it’s no surprise so many people consider moving to a new HOA community or condo building with these – and other – added features. But someone has to pay for these perks. Because of how property is owned and shared in a condo building versus an HOA community, condo fees typically include more expenses than HOA fees. Usually, you pay condo fees to your condo association. And if your property is associated with an HOA community, you pay HOA fees to your homeowners association. But it’s possible to pay condo and HOA fees if a condo is in an HOA neighborhood or the condo complex has an HOA. New homeowners may be unsure whether they’re paying condo fees, HOA fees or both. And they may not understand the differences between the two types of fees, particularly their costs.Explore the differences between types of associations and the fees they schedule.”

Handouts for Buyers: Questions to Ask the Condo Board (NAR REALTOR® News)

“Before you purchase a condo, contact the condo board ahead of time to learn how responsive and organized its members are and be alerted to potential problems. Make sure you read documents about the condo association and have an attorney review them.”

The Condo Market

Explaining the “Condominium Comeback” (Connect CRE, Mar. 7, 2024)

The experts explained that 2024 should be a good year for the condominium space, especially in the urban core.

Naughten said that cities will be the big winners in 2024, mainly because young professionals are showing a high degree of willingness to return. “The 27-year-old living with his parents can’t take the suburbs anymore,” he observed. “They want to be back for the social aspect and to be closer to work.”

Is That Condo Building Structurally Sound? (NAR REALTOR® News, Jul. 28, 2021)

“Urge buyers who identify or suspect red flags, either of a structural or a financial nature, to consult with a qualified expert before making a purchase.”

What Trends Will Shape the Condominium Market in 2026? (Multi-Housing News, Jan. 22, 2026)

“The U.S. condominium sector has started 2026 with a blend of resilience and complexity. Demand for well-located, design-forward product remains steady, particularly in established gateway markets such as New York and Florida, even as broader market conditions continue to evolve. Across markets—from New York City’s resale environment to Miami’s branded, hospitality-driven towers and Tampa’s expanding condo-hotel pipeline—a common set of priorities is emerging. Quality, livability and financial clarity are increasingly separating projects that move forward from those that stall. At the same time, a higher-for-longer interest rate backdrop, shifting policy considerations and more layered capital stacks are pushing developers, buyers and lenders alike to be more selective.”

How to Sell a Condo When the Market is Working Against You (Wall St. Journal May 24, 2026)

“Sellers and their real-estate agents are finding that the most painless way to sell a condo is to be transparent about the state of the building’s finances. That might mean lowering the price to offset a current or future special assessment. It could also mean taking a lower price than identical units fetched just a few years ago. “It’s firmly a buyer’s market for condos,” said Lawrence Yun, chief economist at the National Association of REALTORS®.”

Existing Home Sales: Condo and Co-op Sales and Prices (ational Association of REALTORS®)

“The Existing Home Sales data measures current condo and co-op sales rates, actual totals, and median prices by month for 12 months. Annual totals for thee years. It also includes figures for the nation and the four regions.”

Loan Policies

How Does a Condo Mortgage Work? (U.S. News & World Report, Apr. 10, 2024)

"When buying a condo, homeowners must qualify for the principal, interest, taxes, insurance of the loan and the HOA/condo fee," says Wagner. "Condo fees can vary greatly from building to building, so it's important to understand what all is included in the fee before proceeding with the purchase. Often, when adding the condo fee to a borrower's debt-to-income ratio, their buying power is reduced when compared to a single-family home or townhouse."

Buy a Condo with a VA Loan (The Mortgage Reports, Jan. 1, 2024)

Does the VA allow condo spot approval?

No, unlike the FHA, the VA will not allow for individual condo units to be approved within a non-approved condo complex. To be eligible for a VA loan, the entire complex will need VA approval.

Condo Loans: Defined and Explained (Rocket Mortgage, Mar. 8, 2024)

The added risk factors of condo financing may come with higher interest rates. They’re available from the same lenders who finance homeowners purchasing single- or multifamily homes. If you’re shopping for condos, you may also consider other home options such as apartments.

Condominium Unit Mortgages (Freddie Mac)

“If you’re looking for solutions and options for mortgages you originate that are secured by condominium units, we have a review process that lets you easily determine project status with comprehensive criteria. Project eligibility requirements include items such as financial viability, the residential nature of the project (for example, does the project also include commercial space, hotel operation, business income, etc.), and the ownership structure.”

Interested in Condo Mortgages? Know the Differences and Fight the Challenges! (Houston Association of REALTORS®)

“Are you one of those who value convenience over space? If yes, then you already know that condominiums are one of the best choices you can opt for. If you wish to buy a condo and want to finance it with a condo mortgage, it is crucial to understand the low-down on condo mortgage and the challenges it poses to you as compared to standard loans.”

Condo Resources

Community Associations Institute

“CAI provides information, education and resources to the homeowner volunteers who govern communities and the professionals who support them. CAI members include association board members and other homeowner leaders, community managers, association management firms and other professionals who provide products and services to associations.”

Condominiums (United States Department of Housing and Urban Development)

The Condominiums page allows users to search for FHA-approved condominium projects by location, name, or status. These properties are not for sale by the FHA. The search can be configured to find specific types of projects through the use of the pull-down menus and entry fields.

Living in a Housing Cooperative (National Association of Housing Cooperatives)

“As a democratic organization that follows the cooperative principles, cooperatives give you a voice in the operation of your cooperative. The rights and responsibilities of shareholders are outlined in the various cooperative documents, including the bylaws, occupancy agreement/proprietary lease, and articles of incorporation.”

Condo, Co-op, and Planned Unit Development (PUD) Eligibility (Fannie Mae)

“Step 1: Determine a Condo Project Review Type Step 2: Follow the Condo Project Review Type Requirements Step 3: Confirm the Condo Project Insurance Requirements”

eBooks & Other Resources

eBooks.realtor.org

The following eBooks and digital audiobooks are available to NAR members:

The Complete Guide to Purchasing a Condo, Townhouse, or Apartment (eBook)

The Condominium Concept (eBook)

Condo Owner's Answer Book (eBook)

Financing Your Condo, Co-op, or Townhouse (eBook)

How to Buy a Condominium or Townhouse (eBook)

Make Money with Condominiums and Townhouses (eBook)

Tips & Traps When Buying A Condo, Co-Op, or Townhouse (eBook)

Your Dream Home: A Comprehensive Guide to Buying a House, Condo, or Co-op (eBook)

Books, Videos, Research Reports & More

As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.

Condos and Co-ops (Chicago, IL: Dearborn Real Estate Education, 2006) HD 1377 M48c

Everything You Need to Know Before Buying a Co-op, Condo, or Townhouse (New York, NY: AMACOM, 2006) HD 1341 R74

Condominiums: The Pros and Cons of Ownership (Port Orchard, WA: Windstorm Creative, 2005) HD 1377 L16

Make Money with Condominiums and Townhouses (Hoboken, NJ: John Wiley, 2003) HS 1377 E2

How to Invest in Condominiums: The Low-risk Option for Long-term Cash Flow (New York, NY: John Wiley & Sons, 2002) HD 1377 V81

The Condo and Co-op Handbook: A Comprehensive Guide to Buying and Owning a Condo or Co-op (New York, NY: Macmillan, USA, 1998) HD 1377 W86

How to Buy an Condominium or Townhome: with Sample Forms and Worksheets (Naperville, IL: Sourcebooks, 1997) HD 1377 Ir9

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