The Quick Read: Yes, but only through a path called Single-Unit Approval, and only if the building, the unit and you each clear separate tests. Being off the list does not close the door. It means your lender has to review the building for you, and the cash-out rules apply on top.
Here is the practical picture. A cash-out refinance swaps your current mortgage for a bigger one and hands you the difference in cash. Lendmire arranges the FHA cash-out refinance program through wholesale lenders. Condos add a second layer of review that a single-family house never faces.
Think of it as two gates. Gate one is about you and the loan. Gate two is about the building. Clear one and miss the other, and the file stops.
What “Not on the FHA List” Actually Means
The FHA maintains a list of condo projects it has already approved. Your building can be missing from it for several different reasons, and the reason matters.
| Status | What it means | Path forward |
|---|---|---|
| Never submitted | The association never applied | Single-unit review |
| Expired | Past approval lapsed | Single-unit review |
| Rejected | The application was turned down | Single-unit review, if eligible |
| Withdrawn | The association pulled the application | Single-unit review |
| Approved | On the list today | Standard project route |
Notice the pattern. Four of the five statuses still leave a route open. “Not on the list” is a status, not a verdict.
A common myth says an unlisted building rules out FHA entirely. That is outdated. HUD’s FHA condominium page says FHA insures condo loans for a purchase or refinance in an approved project, or in a project that is not approved but meets Single-Unit Approval requirements.
Another myth: an existing FHA loan proves the building is approved. It does not. The loan may predate a lapse, or the project may have been reviewed one unit at a time.
Why Buildings Fall Off or Never Get On
Full project approval is paperwork-heavy. The association has to gather financials, insurance records and ownership data, and it has to renew that work later. Small boards often skip it. Some never knew it mattered.
Other buildings fail for substantive reasons. Too many units may be rented out. One owner may hold too many units. The budget may be thin or the insurance incomplete. Those same weaknesses can sink a single-unit review too, so check them first.
How Does Single-Unit Approval Work?
Single-Unit Approval lets a lender get one unit approved in a project that is not on the list. According to HUD, the project must be complete and ready for occupancy, must have at least five dwelling units, and cannot be a manufactured home project. It must also meet a subset of the full approval requirements: FHA insurance concentration, owner-occupancy share and financial condition.
The reasoning behind it is practical. When the rule was finalized, the Federal Register said the goal was to give smaller projects, where full approval can cost too much, similar access to FHA insurance. The rule also gave HUD flexibility on the concentration and owner-occupancy limits for these reviews.
You do not file this yourself. Your lender does. The lender completes a questionnaire, Form HUD-9991, and one section applies only to units in unapproved projects. HUD’s instructions for the form say the information must come from verifiable sources such as the association, its management company or public records. They also say submitting the form is not an approval. The lender must review it against FHA requirements and stands behind that review.
In plain terms: your lender is vouching for the building. That is why lenders can be picky about which unlisted condos they take on.
Does It Work for a Cash-Out Refinance?
Probably yes, with one honest caveat. HUD’s condo page says Single-Unit Approval covers a purchase or refinance, and cash-out is a type of refinance. HUD does not appear to spell out cash-out in those exact words, so treat the conclusion as a sound reading of the rules, then have your lender confirm it against HUD Handbook 4000.1 for your file.
Here is how the FHA refinance paths compare for a home you live in:
| Path | Leverage | Appraisal |
|---|---|---|
| Streamline | Existing FHA loan only | None |
| Rate-and-term | Up to 97.75% | Yes |
| Cash-out | Up to 80% | Yes |
Only cash-out puts money in your hand. The other two change the loan without paying you out.
Gate One: The Cash-Out Rules
These apply whether or not your building is approved. Across the wholesale programs Lendmire places FHA files with, the core rules are:
- Occupancy: the condo must be your principal residence, owned and occupied for 12 months before the case number is assigned.
- Leverage: the new loan reaches 80% of the appraised value at most. Some equity stays in the home.
- Ratios: the base housing and total debt ratios are 31/43. Documented compensating factors can stretch that to 40/50 at the top tier, and the automated finding governs most files.
- Mortgage insurance: FHA charges an upfront premium of 1.75% of the base loan, usually financed, plus an annual premium between 0.15% and 0.75% of the balance. The annual figure depends on term, loan amount and LTV.
Second homes and rentals do not qualify for FHA cash-out. Occupancy decides it.
Your HOA dues count toward the debt ratios. A larger loan plus mortgage insurance raises your monthly cost compared with what you pay now, so run that comparison before you commit.
One more point on the 80% cap. It limits total loan against value. It is not a promise you can pull out 80% of your equity. The lender also reviews payment history, credit, income and the appraisal.
Gate Two: The Building
Even with a perfect borrower profile, the project has to pass. Underwriters look at four things:
1. FHA concentration. How many units in the building already carry FHA loans.
2. Owner-occupancy. A minimum share of units must be lived in by their owners rather than rented.
3. Financial health. Reserves, delinquent dues and a workable budget.
4. Insurance. Hazard and flood coverage, which HUD moved into the single-unit section of the form in Mortgagee Letter 2021-09.
Individual owner concentration matters too. That is the share of units held by one owner or related parties. Exact limits are set by HUD and can change, so your lender should quote the current ones rather than a number you read online.
Some third-party sites print specific percentages as if they were fixed. Treat them with caution. The rule has a range, and HUD sets the current number by notice.
The Step-by-Step Path
Here is how a Single-Unit Approval cash-out typically moves, in order:
1. Check the status. Look up your building on the FHA condo list. Note whether it is approved, expired, rejected, withdrawn or absent.
2. Ask the association early. Is the project complete? Has it ever applied? Can the board share owner-occupancy figures, the budget and the insurance policies?
3. Run the Gate One screen. Confirm 12 months of ownership and occupancy, your equity against the 80% cap, and your ratios.
4. Lender collects project data. The association or management company supplies it, and the lender completes the HUD-9991.
5. Case number. The lender requests an FHA case number once the project data supports it.
6. Appraisal. An FHA-roster appraiser sets the value, and that value caps your cash-out.
7. Underwriting. The underwriter reviews you, the unit, the project and the loan together.
The association is the bottleneck. In practice, an uncooperative or slow HOA is a common reason these files stall. The lender cannot manufacture ownership data or insurance records that the board will not hand over.
Single-Unit Approval has to be in place before the loan can move forward. Do not assume it can be sorted out later.
Red Flags That Sink a File
Watch for these before you spend money on an appraisal:
- Too many rented units compared with owner-occupied ones.
- One investor holding a large block of units.
- Dues that many owners have not paid.
- Thin reserves or a budget that ignores major repairs.
- Missing or weak hazard or flood insurance.
- Active litigation against the association.
- Structural or safety problems.
- A project that is incomplete, has fewer than five units, or is a manufactured-home condo.
Any one of these can end the review. Several together usually do.
A Worked Example
Say you have lived in your condo for well over a year. The building is mid-sized and not on the FHA list because the board let its approval lapse. You want cash for a renovation and your current loan is already FHA.
Gate one first. You have met the 12-month occupancy test. Your balance sits well under 80% of what the unit is likely worth, so there is room for cash. Your ratios look workable once the higher balance and mortgage insurance are counted.
Gate two next. You ask the board for the owner-occupancy count, the budget and the insurance certificates. The board answers within reason. Most units are owner-occupied, one investor owns a few units, and dues are mostly current. Your lender completes the HUD-9991 and finds the project fits the single-unit tests.
The appraisal then lands slightly lower than you hoped. That shrinks the cash-out, because the 80% cap applies to the appraised value. You decide whether the smaller amount still justifies a bigger balance and the premium on top. That decision is yours, and it is the honest one to make before signing.
Now flip the story. The board ignores your requests. The lender cannot finish the form. The file stops, and you move to a fallback.
If It Doesn’t Work: Your Options
| If this happens | Consider |
|---|---|
| Project fails the single-unit tests | Conventional cash-out, which follows separate condo rules |
| Board will not cooperate | Wait, or ask the board to pursue full approval |
| Equity is too thin for 80% | A smaller, different loan structure |
| Cash need is small | A home equity loan or line, if your current loan allows it |
If you hold an FHA loan today and mortgage insurance is your main irritation, Lendmire’s piece Can an FHA Condo Owner Take Conventional Cash-Out and Drop MIP? walks through that trade. Conventional loans use their own condo review, separate from FHA’s.
Credit history matters across all of these. HUD’s own waiting periods apply after major events, such as two years from a Chapter 7 discharge and three years from a foreclosure. Those are HUD rules, and each lender applies them to your file.
For the timing side of an unapproved project, Lendmire’s article FHA Cash-Out Requirements for a Condo Project Not Yet Approved covers the project-side details in more depth.
Key Terms Defined
Single-Unit Approval (SUA): an FHA review that approves one unit in a condo project that is not on the approved list.
FHA-approved project: a condo building FHA has reviewed and placed on its approved list.
FHA concentration: the share of units in a building that already carry FHA-insured loans.
Owner-occupancy share: the portion of units lived in by their owners rather than rented out.
LTV (loan-to-value): your loan balance divided by the appraised value of the home.
Mortgage insurance premium: the FHA charge, paid upfront and annually, that protects the lender if the loan defaults.
What to Do Next
Start with two questions for your association: has this project ever been FHA-approved, and can the board share its owner-occupancy figures, budget and insurance documents? Those answers tell you more than any list.
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. Every figure here is subject to lender guidelines and a full file review, and none of it is a commitment to lend.
Frequently Asked Questions
Can I do an FHA cash-out if my condo’s approval expired?
Usually yes, through Single-Unit Approval, because an expired project is treated as not approved. The unit still has to pass the single-unit tests, and you still have to meet the cash-out rules. Your lender confirms both.
Is “spot approval” the same as Single-Unit Approval?
Yes, in everyday use. The official term in HUD’s handbook is Single-Unit Approval. Older articles still say spot approval, which is why you will see both.
Does submitting the form mean my unit is approved?
No. HUD’s instructions say submitting Form HUD-9991 is not an approval. The lender reviews it against FHA requirements and takes responsibility for that review.
Can I use FHA cash-out on a condo that is a second home or rental?
No. FHA cash-out is for your principal residence, owned and occupied for 12 months before the case number. Occupancy decides the leverage, and a second home or rental does not qualify.
What if the building has fewer than five units?
Single-Unit Approval does not cover it. HUD requires at least five dwelling units, and projects that are incomplete or made of manufactured homes also fall outside the route. Conventional financing is the usual fallback.
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.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
2. Federal Register – Project Approval for Single-Family Condominiums
3. HUD Form HUD-9991 Instructions
4. HUD Handbook 4000.1 (archive)
5. HUD Mortgagee Letter 2021-09
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 Much Equity an FHA Condo Needs for a Conventional Cash-Out · Can an FHA Condo Owner Take Conventional Cash-Out and Drop MIP? · How to Prepare a Condo for an FHA Cash-Out Appraisal
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.