The Quick Read: A condo project that isn’t on HUD’s approved list does not automatically rule out an FHA cash-out refinance. HUD lets a lender request approval for a single unit instead of the whole building. You then have two gates to clear: the unit and its project must pass that review, and you must meet the standard FHA cash-out rules. Every figure here is subject to lender guidelines and full file review, and nothing is a commitment to lend.
What Does “Not Yet Approved” Actually Mean?
It means the building isn’t currently on HUD’s list of FHA-approved condo projects. That is a status, not a verdict on your building.
A project can land there for several reasons. It may never have applied. Its approval may have lapsed. Or it may have problems that make it ineligible. The first two are often workable. The third usually is not.
| Status | What it means | Effect on your cash-out |
|---|---|---|
| Approved | On HUD’s list now | Normal condo review |
| Never approved | Never applied | Single-unit approval may apply |
| Lapsed | Approval expired | Single-unit approval may apply |
| Ineligible | Fails HUD’s tests | FHA is off the table |
Many owners assume an unlisted building ends the FHA conversation. It doesn’t. HUD says FHA insures condo loans to purchase or refinance a unit in an approved project, or in a project that is not FHA-approved but meets the single-unit approval requirements.
How Does Single-Unit Approval Work?
Single-unit approval (SUA) is a HUD pathway that lets FHA insure one loan in a building that isn’t on the approved list. The building must still pass a subset of HUD’s project tests. It is not a shortcut.
HUD’s 2019 final rule on single-family condo approval created this path. It also lets HUD suspend new FHA case numbers in a project where FHA-insured loans exceed the maximum. A case number is the file number FHA assigns to your loan.
Here is what HUD says the unit and project must look like:
- The project is complete and ready for occupancy.
- It has at least five dwelling units.
- It is not manufactured housing.
- It has no adverse determination for significant issues affecting its viability.
- It meets tests on FHA concentration, owner-occupancy and financial condition.
FHA concentration is the share of units in the building already carrying FHA-insured loans. Per HUD’s FHA Connection help page, the maximum is 10% for projects with ten or more units. Smaller projects can have at most two FHA-insured units.
That limit matters for you. Your loan counts as one of those FHA units. If the building is already at its limit, SUA is closed, and so is FHA.
What Cash-Out Rules Still Apply to You?
SUA approves the unit. It does not approve you. You still have to meet the ordinary FHA cash-out rules, and those come from the wholesale programs we place files with every week.
Here is the envelope for a cash-out on a primary home:
| Item | FHA cash-out |
|---|---|
| Maximum financing | 80% LTV |
| Occupancy | Owned and lived in for 12 months before the case number |
| Property use | Principal residence only |
| Loan size | County loan limits apply |
LTV means loan-to-value: the loan balance as a percentage of the appraised value. At 80%, you keep at least 20% equity in the home after the cash-out.
Those rules are about the home you live in. A second home or rental can’t use FHA cash-out at all. Occupancy decides the leverage.
Two other pieces of the program also apply. The first is mortgage insurance. FHA charges an upfront premium of 1.75% of the base loan, which is financed into the balance. It also charges an annual premium between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. On a thirty-year loan above 90% LTV, the annual premium lasts the whole term. At or below 90%, it ends after eleven years. A cash-out tops out at 80%, so that lower-LTV schedule is the one that generally applies, subject to lender guidelines.
The second is your qualifying ratios. These compare your monthly housing cost, then your total debts, to your income. The base pair is 31/43. Documented compensating factors can stretch that to 40/50 at the top tier, and the automated underwriting finding governs most files. Your HOA dues count as part of your housing cost.
For a full walk-through of the program, see Lendmire’s FHA cash-out refinance program page.
The Order of Operations
Sequence matters here. Doing it out of order costs you an appraisal fee on a building that may never pass.
1. Screen the project. Confirm it is complete, has five or more units, isn’t manufactured housing and has no adverse determination.
2. Check the concentration. Find out whether the building has room for another FHA loan.
3. Request the SUA case number first. Per HUD’s help page, the lender submits the Condominium Loan Level/Single-Unit Approval Questionnaire (Form HUD-9991) when requesting the case number. The HOA or its management company completes that form.
4. Order the appraisal. The appraisal sets the value the 80% cap applies to. It follows the case number.
5. Underwrite. The lender reviews your file and the HOA’s governing documents, budget, financials and insurance.
If the project already has an FHA Condo ID but isn’t currently approved, the lender enters that ID when requesting the case number. HUD’s Mortgagee Letter 2019-13 covers that process.
The case number is your first real answer. If HUD won’t issue it, you know early, before the appraisal.
Who Has to Do What?
You don’t file this yourself. Your lender submits the request. But you will be the one nudging the HOA.
Most delays trace back to the association. A board that is slow to return the questionnaire stalls everything. Missing financials or an out-of-date insurance certificate do the same.
Ask the HOA or management company for these:
- The completed HUD-9991 questionnaire.
- The governing documents.
- The current budget.
- The latest financial statements.
- Proof of the association’s insurance.
Be polite and specific. A board that understands what you need and why tends to respond.
Two Scenarios in Plain Words
An approvable file. Say you’ve lived in your unit for several years. The building is complete, has well over ten units and has no litigation. Few units carry FHA loans, so there’s room under the concentration limit. The HOA returns its paperwork cleanly. The case number issues, the appraisal supports an 80% loan, and your ratios fit. This is the shape of a file that can work, subject to lender review.
A blocked file. Say your building has fewer than ten units and two owners already hold FHA loans. Your loan would be the third. That breaks the small-project limit, and no amount of equity fixes it. Or say the project has an adverse determination for viability issues. Same result. In both cases you’d look at other options.
Where the Rule Breaks
A few edge cases trip people up.
- Over the limit. A project already above the concentration maximum isn’t eligible for SUA.
- Small buildings. Projects with five to nine units allow only two FHA-insured units.
- Manufactured housing. These projects are excluded.
- Lapsed approval. The 2019 rule was designed so projects with expired approval can use SUA. Treat the details as something a lender confirms file by file.
- Streamlines. A non-cash-out FHA streamline is a different transaction, and the condo paperwork may not apply the same way. Ask your lender.
- Newly built phases. SUA generally targets existing, completed projects.
- Second homes and rentals. FHA cash-out is for your primary residence, full stop.
One more wrinkle: a seasoned owner and a recent buyer are treated differently. HUD’s glossary defines the value used for refinances of a home acquired within 12 months as the lesser of purchase price plus documented improvements, or the property value. Since cash-out also needs 12 months of ownership and occupancy, plan around that clock.
Should You Borrow Against It at All?
A cash-out replaces your current loan with a bigger one. The CFPB says cash-out refinances can raise foreclosure risk because they typically carry higher payments and higher balances than other refinances. They can also turn unsecured debt, like credit cards, into debt secured by your home.
Compare total monthly cost on the same basis. Include mortgage insurance and HOA dues on both sides. A comparison that leaves something out of one side is not a comparison.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
What If the Project Can’t Be Approved?
You have a few paths, each with tradeoffs.
- Conventional cash-out. Different lenders and different rules. Condo review still applies.
- Home equity loan or line. These leave your first loan alone, but they add a second payment.
- Wait. If the problem is fixable, such as a lapsed approval or missing paperwork, the association may cure it.
- Skip the cash-out. If the goal is a lower balance or a different term, a different refinance type may fit.
None of these is automatically better. It depends on your equity, your credit and what the building looks like to a lender.
Key Terms Defined
Single-unit approval (SUA): A HUD pathway for FHA to insure one loan in a condo project that isn’t on the approved list.
FHA concentration: The share of units in a project that already carry FHA-insured loans.
Case number: The file number FHA assigns to your loan, which also signals the project passed the concentration check.
Cash-out refinance: A new, larger loan that pays off your current mortgage and gives you the difference in cash.
LTV: Loan-to-value, the loan balance as a percentage of the home’s appraised value.
Adverse determination: A HUD finding of significant issues that affect a project’s viability.
Frequently Asked Questions
Can I do an FHA cash-out if my condo building isn’t approved?
Possibly. Single-unit approval lets FHA insure one loan in an unlisted project if the building passes HUD’s tests. HUD’s pages say “refinance” generally and don’t spell out cash-out within SUA, so your lender confirms how it applies to your file.
Who applies for single-unit approval, me or the lender?
The lender. It requests the case number and submits the questionnaire. Your job is to get the HOA or management company to complete the paperwork.
Does single-unit approval mean I’m approved for the loan?
No. It clears the unit and project for this loan. You still need to meet the cash-out rules: a primary residence, 12 months of ownership and occupancy, and no more than 80% LTV. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
What if my building has too many FHA loans already?
Then SUA isn’t available and FHA is off the table for that building. In a building with fewer than ten units, the limit is two FHA-insured units. With ten or more, it is 10%.
Is an expired approval the same as a bad building?
No. A lapsed approval often just means nobody renewed it. A lender can still review the project through SUA, though each file is judged on its own facts.
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 broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see FHA loan programs.
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References
2. Federal Register – Project Approval for Single-Family Condominiums
3. HUD – FHA Connection Condominiums Help
4. HUD Mortgagee Letter 2019-13
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: Is an FHA Cash-Out Easier Than Conventional If You Want Out of FHA? · FHA Cash-Out Requirements for a Conventional Borrower With Tight DTI · FHA Cash-Out Ratio Requirements for Consolidating Debt on a High DTI
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.