Reverse Mortgage For A Condo
A HECM, the reverse mortgage FHA insures, can be secured by a condo you live in. With our reverse mortgage program, the unit must be in an FHA-approved project or otherwise meet FHA’s condo approval rules, and you keep paying your condo or HOA dues.
Quick answer
Saxton Mortgage does. At least one HECM program we offer accepts condos when the condo is on FHA’s approved list. If the project is not approved, the required condo documents can be submitted to HUD for project approval processing. The condo must be your owner-occupied primary residence.
What the building has to meet
These are FHA rules for a unit in an approved condo project.
- The project is on FHA’s list of approved condo projects when the FHA case number is assigned.
- At least 35 percent of the units are owner-occupied. A unit the builder or developer still owns does not count.
- No more than 15 percent of the units are more than 60 days behind on association dues or special assessments.
- The association carries a master hazard insurance policy for the whole project, and that coverage stays in place for the life of the HECM.
- If buildings in the project sit in a special flood hazard area, the association carries flood insurance that protects unit owners and the common areas.
- FHA may stop issuing new HECM case numbers in a project where FHA-insured loans are more than half of the units.
On FHA’s approved list
Mostly owner-occupied units
Few owners behind on dues
A master policy in place
Flood coverage where needed
A limit on FHA loans
How A Condo HECM Works
It is a HECM, the reverse mortgage FHA insures, secured by a condo unit that is your principal residence.
FHA lists condo units as an eligible HECM property type, and our reverse mortgage program accepts condos. With our program, the condo must be in an FHA-approved project or otherwise meet FHA’s condo approval rules, so ask us about your building before you apply. If your project is not approved yet, the full set of project documents must be submitted for FHA project approval review, and the appraisal is ordered only after those documents arrive. The project must be approved before the loan can move forward, and approval is not guaranteed.
You keep paying your condo or HOA dues. FHA counts condo, PUD and HOA fees as property charges, the same as property taxes and insurance. The lender verifies 24 months of dues payment history on all real estate you own. A satisfactory history means your taxes and dues are current at application, with no property charge delinquencies in the previous 24 months. Even when a set-aside pays property taxes and insurance from loan proceeds, you remain responsible for your dues and every other property charge.
The lender also reviews the recorded condo declaration and covenants. If they require the association to approve a new mortgage that is not a purchase loan, the lender gets that approval in writing before the HECM is made. If the master policy does not cover the inside of your unit, you need a walls-in (HO-6) policy. The loan uses a condominium rider. For age, counseling and the other borrower rules, see our reverse mortgage requirements page.
Why choose Saxton for a condo reverse mortgage
This page is for condo owners 62 and older, and the adult children helping them weigh a reverse mortgage.
We Check The List First
The lender confirms whether the project is on FHA’s approved list when the case number is assigned. That is one reason to ask us about your building before you apply.
Dues Stay Your Bill
A set-aside can pay property taxes and insurance from loan proceeds. It does not pay condo or HOA dues. You remain responsible for those.
Unpaid Dues Carry Risk
If property charges go unpaid and not enough loan funds remain to cover them, the lender must tell you that not paying within 30 days of the due date will make the HECM due and payable.
HO-6 Only When Needed
You need your own walls-in policy only if the association’s master policy does not cover the interior of your unit.
Buying A Condo Works Too
A HECM for Purchase can be used to buy a condo unit in an approved project or legal phase, as long as you will live in it as your principal residence.
Co-Ops Do Not Qualify
FHA will not insure a HECM on a cooperative unit or a condotel, and our program does not accept cooperatives.
Hear From Homeowners Like You
Frequently Asked Questions
Plain answers for condo owners thinking about a reverse mortgage.
Saxton Mortgage does. At least one HECM program we offer accepts condos when the condo is on FHA’s approved list. If the project is not approved, the required condo documents can be submitted to HUD for project approval processing. The condo must be your owner-occupied primary residence.
Yes, if the unit qualifies. Condo units are an eligible HECM property type. With our reverse mortgage program, the unit must be in an FHA-approved project or otherwise meet FHA’s condo approval rules, and the condo must be your principal residence. Ask us about your building before you apply.
Ask us before you apply. FHA has more than one condo approval path, and we will look at which rules apply to your unit. If the project needs approval, its full set of documents must be submitted for FHA project approval review, and the appraisal is ordered only after those documents are received. There is no guarantee the project will be approved.
Yes. Condo, PUD and HOA fees are property charges, and they stay your responsibility. A set-aside for property taxes and insurance does not cover them. The lender documents the amount of your dues from the appraisal or a written statement from the association.
Yes. The lender verifies 24 months of condo, PUD or HOA fee payments on all real estate you own. Copies of bills and canceled checks, or other proof of payment, can be used instead of direct verification.
Only if the association’s master policy does not cover the inside of your unit. In that case you need a walls-in (HO-6) policy. The association’s master hazard policy must stay in place for the life of the HECM.
Only if your recorded condo declaration or covenants require association approval of a mortgage that is not a purchase loan. When they do, the lender must get that approval in writing before the HECM is made.
FHA will not approve projects that include cooperative ownership, condotels, timeshare projects, multi-dwelling condominiums, houseboat projects, continuing care facilities, projects where owners must rent their units through a rental pool, projects in the Coastal Barrier Resources System, or projects with an adverse determination by FHA.
Find out what you qualify for
Tell us about your condo, your building and what you want the money to do, and we will check how it fits our program.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.