The Quick Read: On an FHA cash-out refinance, a condo is judged twice. First the building has to be eligible for FHA financing. Then an appraiser values your unit on a condo-specific report, and that value sets the ceiling on the loan. The ceiling is 80% of adjusted value, and every lien on the unit counts toward it. Your own occupancy history and payment record are checked before any of that starts.
Key Takeaways
- Two gates decide a condo cash-out: you (the borrower) and the building (the project).
- The appraisal comes after the case number, and a new appraisal is ordered for each case number.
- Cash-out is capped at 80% of adjusted value, so a low appraisal shrinks your cash by more than the percentage drop.
- A building that is not on the approved list may still work through single-unit approval, but that route has limits.
- Ask the lender to check your building’s status before you spend money on an appraisal.
What Is an FHA Cash-Out on a Condo, Exactly?
It is a new FHA loan that pays off your current mortgage and hands you some of your equity in cash. Equity is the part of the home’s value you own outright. You can spend the cash on anything. That is the difference from a no-cash-out refinance, where the new loan only covers the old balance and closing costs.
On a house, the lender looks at you and the property. On a condo, it looks at you, your unit, and the whole building. You do not own the building alone, so its finances and its mix of owners affect your loan.
Across the wholesale programs Lendmire places files with, the FHA cash-out reaches 80% loan-to-value (LTV) on a home you owned and lived in for 12 months before the case number. LTV is the loan balance divided by the home’s value. The case number is the tracking number FHA assigns to your loan file. This is subject to lender guidelines and full file review, and nothing here is a commitment to lend. The details of the FHA cash-out refinance program are on its own page. This article covers what changes when the home is a condo.
Gate One: Do You Qualify as the Borrower?
Check yourself before you check the building. Three tests come up on nearly every file.
Occupancy and ownership. At least one borrower must have owned the unit and lived in it as a principal residence for the 12 months before the case number is assigned. The clock runs to the case number, not to the day you sign. FHA cash-out is for the home you live in. A second home or a rental does not fit this loan, because occupancy decides which leverage a program allows.
Payment history. FHA has payment-history requirements for cash-out refinances. You may see online claims about a specific waiting period or a set number of payments. The exact requirements depend on the current FHA rules and the details of your file, so ask your loan officer how they apply to you. Do not rely on a forum post.
Income. A co-borrower who does not live in the home cannot help you qualify on a cash-out. Your own income has to carry the new loan, including the ratio test of housing cost and total debts against income. The program’s base pair is 31/43. Documented compensating factors can stretch it as far as 40/50 at the top tier. The automated finding governs most files.
Mortgage insurance applies too. The FHA program charges an upfront premium of 1.75% of the base loan, which is usually financed. It also charges an annual premium between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. Your Loan Estimate shows what that means on your own loan.
Gate Two: Is the Building FHA-Eligible?
This is where condos split from houses. Eligibility is partly out of your hands, because tests like owner mix and association finances belong to the building, not to you.
HUD Handbook 4000.1, the FHA rulebook, covers condo units and project approval in its condominium sections. In practice your building lands in one of three buckets.
| Bucket | What it means | What happens next |
|---|---|---|
| On the approved list | FHA or a lender reviewed and approved the project | Loan proceeds on the unit’s own merits |
| Not approved, old Condo ID | An earlier review expired, was rejected or was withdrawn | Lender checks status; may need single-unit approval |
| Not approved, no ID | The building was never submitted | Lender must use single-unit approval |
FHA Connection’s condominium help pages describe the two review routes. HRAP is HUD’s own review, and DELRAP is a lender-run review. Your loan officer can look up your building’s status.
What Is Single-Unit Approval?
Single-unit approval (SUA) lets FHA approve one unit in a building that is not on the approved list. It is a fallback, not a loophole. HUD’s announcement of its condo rule changes says a unit qualifies only if the project is complete and caps how many units in the building may already carry FHA insurance. The cap is a percentage in larger buildings and a small unit count in smaller ones. FHA Connection help adds that the project must be ready for occupancy and meet a minimum unit count.
For SUA, the lender submits a questionnaire, Form HUD-9991, when it requests the case number. The lender fills out one section. The association or its management company fills out another. Your case then sits on hold until FHA approves or rejects it.
Two cautions matter here.
- A case number is not an approval. HUD says so directly on its FHA INFO page. Getting a number only means the file was opened.
- Refinance availability varies. Much of the public guidance on single-unit approval is written for purchases. Whether it fits your refinance is a question for your lender before you pay for anything.
HUD has also automated part of this. Condo projects already in its system with certain expired or rejected statuses can now get a case number automatically. Other requests still go through manual review.
What Does the Building’s Condition Mean for You?
Project tests are pass-or-fail, and the association’s paperwork can slow you down. HUD itself has acknowledged that associations often find the forms burdensome and that delays can result.
HUD’s current thresholds cover items like these:
- The share of units that are owner-occupied.
- The share of units that already carry FHA insurance.
- How much of the building is commercial space.
- How many owners are behind on association dues.
- Whether the association keeps adequate reserves.
- Open lawsuits against the association.
Use the thresholds on HUD’s own pages, not older guides. Reserve and delinquency tests also show up on vendor pages, so ask your lender for the current test.
What you can fix and what you cannot. You can fix the inside of your own unit. You cannot fix a leaking roof, a failing shared system or a special assessment, because those belong to the association. A building problem can sink your loan even when your unit is perfect.
How Does the Appraisal Work on a Condo?
The order matters. The case number comes first, and the appraisal follows it. FHA requires a new appraisal for each case number. An appraisal done under another case number cannot be reused. So do not order one early to “get ahead.” If the building fails review, you paid for a report you cannot use.
The appraiser reports on Form 1073, the Individual Condominium Unit Appraisal Report. HUD’s appraisal protocols have long required it for a unit in a condo project. The appraiser must follow FHA’s appraisal guide and delivery data rules.
Unit Level vs. Project Level
| What the appraiser looks at | Unit level | Project level |
|---|---|---|
| Condition and updates | Kitchen, baths, systems, finishes | Roof, hallways, exteriors, shared systems |
| Value drivers | Floor, view, layout, parking | Amenities, location, association dues |
| Comparable sales | Similar units | Sales in your building first, then similar projects |
| Red flags | Safety or livability defects | Deferred maintenance, special assessments, litigation |
The appraiser picks comparable sales, called comps, from your own building first when possible. Then the search widens to similar projects nearby. Association dues and assessments feed into value, because a buyer pays for the unit and for the cost of the building.
In older buildings, the appraiser also looks at the interior, the common areas and the exteriors. The appraiser comments on paint condition and on the overall state of the project. HUD has also trimmed some of its photo, map and sketch requirements, and has made quality-control reviews of appraisals more flexible.
Appraisal reports are good for a limited window set by HUD and the lender. The exact length of that window depends on the program and the lender, so ask your loan officer what applies when your file is submitted. If closing slips past that window, you may need an update.
The format of appraisal data is also changing. HUD has described an optional move to a newer data standard for FHA cases. Your appraiser and lender handle that. You only need to know that one case number uses one format.
How Does the Appraised Value Set Your Cash?
The cash-out cap is 80% of adjusted value. Adjusted value is the appraised figure after FHA’s own adjustments. This is a combined limit, so any lien that stays in place counts toward it. Ask how a home equity line or second loan would be treated on your file. A second lien takes room away from your cash.
Here is why a low appraisal hurts more than it looks. Picture a condo owner who expects the unit to appraise at one level and gets a report 10% below it. The 80% ceiling drops by 10%. But the balance on the old mortgage does not move. So the cash left over falls by more than 10%, and it can shrink toward zero.
The same math runs the other way. Strong comps in a well-kept building can lift the ceiling.
Also remember the new loan carries mortgage insurance and a larger balance. Both raise the monthly cost, and that cost goes into your ratio test. Association dues count in the ratios too. A special assessment can hurt twice: it can lower the value and raise your costs.
When the Value Comes In Low or Repairs Are Required
Your options depend on what went wrong.
- Low value, normal condition. Ask the lender whether the appraiser’s comps look complete. If you have sales data the appraiser missed, your loan officer can submit it for a review of the value. Otherwise you can take a smaller cash-out, or wait and revisit.
- Repairs inside your unit. A safety or livability defect in your own unit can be fixed and rechecked.
- Repairs in the common areas. You cannot fix a shared roof or hallway yourself. The association has to act. A condition on a common element can delay the loan or block it until the association completes the work.
- Building not eligible. You can ask the association to pursue approval, or look at a different program, or keep your current loan. A different program may allow different leverage, so weigh it against the cash you need.
Where the General Rule Breaks
A streamline is different. An FHA-to-FHA streamline refinance does not require the HUD-9991. It is not a cash-out and, under the program Lendmire places files with, it needs no appraisal. If you only want a different term or payment structure, ask whether a streamline fits better.
The whole building does not always need approval. Single-unit approval can cover one unit in an unapproved building, if the building meets HUD’s tests. Older guides that say otherwise are out of date.
“Delayed financing” is not an FHA product. Do not expect it to substitute for the 12-month occupancy test.
Mixed-use buildings and limited common elements. Ground-floor shops raise the commercial-space test. Assigned parking and balconies get reported as part of the unit. Your appraiser and lender decide how each is treated.
What Does Your Decision Look Like?
Most borrowers follow the same sequence.
1. Confirm you meet the 12-month ownership and occupancy test.
2. Ask the lender to look up your building’s FHA status before anything else.
3. If the building is not approved, ask whether single-unit approval is realistic for a refinance.
4. Get the case number, then order the appraisal.
5. Gather association documents and prepare your unit.
6. Review the Loan Estimate and compare the full terms.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Who Does What
| Party | Role |
|---|---|
| You | Occupancy proof, income documents, access to the unit |
| Lender | Checks project status, requests the case number, orders the appraisal |
| Association | Completes its sections of the project questionnaire |
| Appraiser | Reports the unit’s value and the project’s condition |
Key Terms Defined
Case number: The tracking number FHA assigns to a loan file; the appraisal is tied to it.
Single-unit approval (SUA): A route that lets FHA approve one unit in a building that is not on the approved list.
Adjusted value: The appraised value after FHA’s adjustments, and the number the 80% cap is measured against.
Project: The condo building or community as a whole, not just your unit.
Common elements: The shared parts of the building, such as roofs, hallways and systems, which the association maintains.
Special assessment: A one-time charge to owners for a major repair or shortfall.
Frequently Asked Questions
Does an FHA cash-out on a condo always need a new appraisal?
Yes, in practice. A cash-out takes more than the old balance, so the lender needs a current value. FHA also requires a new appraisal for each case number, so a report from another case cannot be reused.
Which appraisal form applies to a condo unit?
Form 1073, the Individual Condominium Unit Appraisal Report. It covers both the unit and the project. A house uses a different form.
Can I use a second home or rental condo for FHA cash-out?
No. FHA cash-out is for your principal residence, and occupancy decides which leverage a program allows.
What if the association is slow with the paperwork?
It can delay your file. In a building that needs single-unit approval, the association has to complete its part of the questionnaire. Contact the association early and ask your loan officer exactly which sections it must fill out.
Does a case number mean my condo is approved?
No. HUD says a case number is not an approval of the unit or the project. It only means the file was opened and review can proceed.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. HUD Handbook 4000.1 (condominium sections)
2. FHA Connection Condominiums Help
3. HUD announcement of the condo rule changes
This article is part of Lendmire’s FHA Loan series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How to Pass an FHA Cash-Out Appraisal on an Existing FHA Loan · FHA Cash-Out Annual MIP Rules With an Existing FHA Loan · Can You Get an FHA Cash-Out When Conventional Is Too Costly?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.