The Quick Read: A building missing from the approved list gets a project review on top of your own loan review, and both have to pass. The lender checks the building’s numbers, such as how many owners live there and how many already carry FHA loans. It also checks the association’s finances. Your side of the file is a standard FHA cash-out, which tops out at 80% loan-to-value.
Key Takeaways
- “Not on the list” starts a review. It does not end the loan.
- The file has two gates: you (the borrower and the equity) and the building (the project).
- The building review is unit by unit, and it depends on documents your association controls.
- The 80% cap applies to the whole new loan, so usable equity is smaller than many owners expect.
- Cash-out is only for the home you live in. A second home or rental condo does not qualify.
What Does “Unapproved” Actually Mean for a Condo?
An unapproved condo is a building FHA has not signed off on as a whole. It is not a verdict on your unit or your finances. FHA insures a condo loan only when the unit sits in an approved project or qualifies for a one-unit exception. HUD’s condo page describes both paths.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.24% as of October 29, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not an FHA cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the FHA cap on a principal residence with the upfront premium financed, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
An illustration, not a Loan Estimate, an approval, a quote, or a commitment to lend. The rate shown is the weekly Freddie Mac thirty-year conventional benchmark, used as a market reference; an FHA cash-out is priced by the lender at lock, and this is not an FHA cash-out refinance quote. HUD’s cap limits the base loan; the upfront premium is financed on top of the capped base loan; the monthly premium for the first year follows the snapshot’s schedule. Cash available means the base loan the cap permits less the balances retired, before closing costs, which this calculator leaves out. The line figure applies the line program’s combined loan-to-value ceiling to the same value and balance. Taxes and insurance are estimates you can edit. Licensed in sixteen states for consumer mortgages.
Think of the approved list as a shortcut. If your building is on it, the lender confirms the status and moves on. If it isn’t, the lender has to do the project work itself, one loan at a time.
Why would a building be off the list? Several ordinary reasons:
- The association never applied.
- A past approval expired.
- An application was rejected or withdrawn.
- The building was approved once and nobody renewed it.
HUD’s own help page says the one-unit route is open to a unit in a project that was never approved. It is also open to a project whose status reads Expired, Rejected, or Withdrawn. You can read that wording on HUD’s FHA Connection condo help page.
The Two Gates: You First, Then the Building
Every file here has to clear two separate gates. Failing either one stops the loan.
Gate one is you and the equity. This is the regular FHA cash-out file. Across the wholesale programs Lendmire places FHA loans with, a cash-out reaches 80% loan-to-value. You must have owned and lived in the home for 12 months before the case number is assigned. The home must be your principal residence. Credit scores, income and debt ratios get reviewed like any other FHA file. The base ratio pair is 31/43, and documented strengths can stretch it toward 40/50, subject to lender guidelines and full file review.
Gate two is the building. Here the lender asks whether this project is healthy enough for FHA to insure a loan inside it. The answer comes from the project’s own numbers, not from yours.
The two gates don’t trade off. Strong credit won’t rescue a building with no concentration room. A perfect building won’t lift a loan that is over the equity cap. The rest of this piece is about the building gate.
How Does FHA Cash-Out Underwriting Read an Unapproved Condo Project?
The lender reads the project in a set order. Here is the sequence, start to finish.
Step 1: Check the status. The lender searches HUD’s condo database by state and project name. The search tool shows whether the building is approved, expired, rejected, withdrawn, or missing. A listing that says “FHA approved” is not proof. The database is. HUD also removed the appraiser’s duty to check the list, which leaves the status check with the lender’s underwriting team, per HUD’s handbook update.
Step 2: Route the file. An approved project follows the approved path. A project that isn’t approved needs the one-unit exception, called Single-Unit Approval, or SUA. In practice, a lender with its own FHA underwriting authority has to submit it. The association and an agent can’t apply on your behalf.
Step 3: Request the case number as an SUA file. The lender submits the project form when it asks for the FHA case number. HUD’s help page confirms that form goes in at case-number time. If the building already has a condo ID but isn’t currently approved, the lender enters that ID, per HUD’s interim process letter. Keep in mind that a case number is not a project approval. It only starts the review.
Step 4: Collect the project documents. This is where borrowers feel the delay risk, because the association has to supply most of them. Details are in the next section.
Step 5: Test the building against the SUA standards. The project has to be complete and ready for occupancy. It must contain at least five dwelling units. It can’t be a manufactured home. It then has to meet a narrower set of approval tests. HUD’s condo page names FHA insurance concentration, owner-occupancy percentage and the project’s financial condition. The underwriter also looks at insurance coverage, pending legal action and physical condition.
Step 6: Underwrite you and the cash-out. This is the 80% cap, the 12-month ownership and occupancy test, the credit review, and the ratios. The appraisal still has to meet FHA property standards, and the building’s physical condition feeds into it.
Step 7: Decide. The project has to clear the SUA tests and you have to clear the cash-out rules. One yes isn’t enough.
What Documents Does the Lender Pull From the Association?
The association or its management company typically fills out the project section of the one-unit approval form. The lender completes its own section and verifies the loan-level facts. HUD publishes a required-documentation list for these files.
The form collects these items:
- FHA insurance concentration in the building
- Owner-occupancy percentage
- Share of units held by any one owner
- Units behind on dues
- Reserve balance and operating funds
- Commercial or non-residential space
- Annual association dues
- Special assessments
Lenders usually back this up with the association’s budget, insurance certificates and legal disclosures. The exact package depends on the lender and the building.
Here is what homeowners miss. These documents belong to the association, not to you. A cooperative manager can make the file smooth. A slow or unwilling board can stall it, and nothing in your credit file fixes that. Ask for the project form information before you apply.
The Numbers That Decide the Building Gate
Three project measures carry most of the weight. The rest of the review is supporting detail.
FHA concentration. This is the share of units in the building already insured by FHA. For projects with ten or more units, the operative figure is 10% of units. Smaller projects, under ten units, can have no more than two FHA-insured units. Both limits appear on HUD’s help page, and the 10% figure is confirmed in HUD’s interim process letter. Federal rule text discusses a wider range, but 10% is the working number.
Concentration is the hard stop that surprises people. A small building with two FHA loans already has no room for a third, even if everything else looks good. HUD can also suspend new case numbers once a project exceeds the cap. And room can disappear while your loan is in process if another buyer’s FHA loan lands first.
Owner-occupancy. The lender wants to see that most units are lived in by their owners rather than rented out. A building dominated by investors reads as less stable. This is a project test, which is separate from your own occupancy requirement.
Association finances. Reserves, units behind on dues, special assessments and operating funds tell the underwriter whether the building can pay its bills and maintain itself. Dues and assessments also hit your own housing budget, so they matter twice.
Litigation, insurance and physical condition round out the review. For buildings in a mapped flood hazard area, the association has to carry flood insurance on the buildings.
Where the Decision Goes: A Status Table
This table shows what each status usually means for your next step.
| Project status | What it means | Typical next step |
|---|---|---|
| Approved | Building cleared by FHA | Standard approved-project path |
| Expired | A past approval lapsed | Single-unit route, or renew approval |
| Rejected or withdrawn | Application didn’t finish | Single-unit route is allowed |
| Never listed | No approval on record | Single-unit route if it meets tests |
| Fails the tests | Concentration, finances or condition | Look at other loan types |
Sources disagree on how long a full project approval lasts, so confirm the current term with your lender instead of relying on a number you read online.
A Worked Scenario
Say you’ve owned and lived in a 24-unit condo building for several years. You want to pull equity out to pay off other debt. Your credit is solid and you have plenty of equity.
The lender searches the database and finds the building was approved once, but the status now reads Expired. That isn’t a denial. It routes your file to the single-unit path.
The lender requests a case number as a one-unit approval and sends the project form to your management company. The form comes back showing 6% of units are FHA-insured, well under the 10% cap. Owner-occupancy looks healthy, reserves are funded, and only a few units are behind on dues. There is no pending lawsuit.
Now the borrower gate. Your ownership and occupancy history clears 12 months. The new loan, which includes the payoff of your existing mortgage and any financed costs, has to stay at or under 80% of the home’s value. Because that cap covers the whole loan, the cash you receive is smaller than 80% of your value suggests.
Both gates clear, and the deal works on. Change one fact and the picture shifts. If the building were a small one, under ten units, with two FHA loans already on the books, it would have no room for a third. That alone could stop the file, no matter how clean your credit is.
Underwriting decisions depend on the lender, the full file and the building. Nothing here is a commitment to lend.
Where the General Rule Breaks
A few edge cases trip up borrowers and agents alike.
Not on the list does not mean ineligible. HUD’s own wording says unlisted, expired, rejected or withdrawn projects can still go through the single-unit route.
Single-unit review is narrower, not lighter. HUD describes SUA as using a subset of the approval standards. It’s a unit-by-unit review. Don’t assume it’s easier than full approval, because some of the toughest tests, like concentration and finances, still apply.
A second home or rental condo doesn’t work. Cash-out is limited to owner-occupied principal residences. Occupancy decides the leverage and the program, so a condo you rent out or use part-time needs a different loan type.
Approval was fine at purchase, but isn’t now. Many owners bought when the building was approved, then refinance after the approval lapsed. The refinance doesn’t inherit the old approval. The lender reads the project as it stands now.
The amount of cash doesn’t change the project review. Taking out a small amount or a large one, the building gets the same look. The cash amount only affects the equity cap.
Rules get updated. HUD revises its handbook and policy letters regularly. Details like documentation lists change, so your lender should confirm current requirements before you build a plan around them.
What a Cash-Out Costs Your Equity
The 80% cap isn’t a number for your cash. It is the ceiling on the entire new loan. Your payoff, financed closing costs and any financed premium all sit under that line. FHA charges an upfront mortgage insurance premium of 1.75% of the base loan, which is typically financed, plus an annual premium of 0.15% to 0.75% depending on term, amount and LTV. Those premiums are a program mechanic, not a price quote, and they eat into the room under the cap.
The cap used to be higher. HUD lowered it from 85% to 80%, and its press release explains why: cash-out refinances were a large and growing share of FHA business, and HUD wanted to reduce risk. If an old article or a relative’s story mentions 85%, that’s out of date.
What to Do If the Building Fails
If the project can’t clear the single-unit tests, you have a few paths. You can keep your current loan. Or you can wait. Some buildings fix the problem themselves by paying down delinquencies or rebuilding reserves.
The most useful early step is simple. Ask your association for the project-form information before you apply. Find out fast whether the building is a candidate (and whether the board is willing to help).
Key Terms Defined
Project approval: FHA’s sign-off on a whole condo building, so every unit qualifies for FHA loans.
Single-Unit Approval (SUA): A one-unit exception that lets a lender seek FHA insurance on a unit in a building that isn’t approved.
FHA concentration: The share of units in a building already insured by FHA.
Cash-out refinance: A new mortgage larger than your current payoff, where you receive the difference as cash.
LTV (loan-to-value): The new loan balance divided by the home’s appraised value.
Case number: The identifier FHA assigns to a loan file. It starts the file and is not an approval.
Owner-occupancy percentage: The share of units in a building lived in by their owners.
Frequently Asked Questions
Can I get an FHA cash-out on a condo that isn’t on the approved list?
Possibly. The lender can pursue Single-Unit Approval, which reviews the building for your one unit. The building has to be complete, have at least five units and pass the project tests. You also have to clear the standard cash-out rules, subject to lender guidelines and full file review.
Does the amount of cash I take out change the building review?
No. The project is judged on its own numbers, such as concentration, occupancy and finances. The amount of cash only affects your loan-to-value, which is capped at 80% for an FHA cash-out.
Who has to apply for single-unit approval, me or the association?
The lender does. In practice, a lender with its own FHA underwriting authority submits the request. The association and your agent can’t apply directly. The association’s role is to complete its section of the project form and supply supporting documents.
What if the database lists my building as previously approved but the status now says Expired?
Expired doesn’t mean denied, but it does mean the building isn’t currently approved. HUD’s guidance allows the single-unit route for projects with an Expired status. The lender reads the building as it stands now, so it must clear the current tests.
Does a listing remark or HOA letter prove the condo is approved?
No. The database search is the proof, and the lender runs it. A remark that says “FHA approved” can be out of date. Even a case number isn’t an approval.
Next Step
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, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
4. HUD – Handbook Update 9 Transmittal
5. HUD – Mortgagee Letter 2019-13
6. HUD: FHA Sua Condo Required Docs
7. HUD Archives – Press Release PR19-114
This article is part of Lendmire’s FHA cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Does an FHA Cash-Out Take Longer Than a Conventional One? · Best FHA Cash-Out Refinance Program Without Bringing Cash · Can You Get an FHA Cash-Out Refinance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.