What Are the Types of Homes That Qualify for FHA Loans?

David Thackham January 28, 2021 | 7 min read
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You might be surprised which homes you can (and which homes you can’t) buy with an FHA loan.

You may have heard that the requirements are more strict when it comes to the type of property you can purchase with a Federal Housing Administration (FHA) loan. Perhaps you even think that only fully finished single-family homes are FHA eligible.

It may surprise you to learn that FHA home loans can actually be used to purchase a variety of different home types, including construction properties, fixer-uppers, condos, and more.

With that said, the FHA does have minimum property standard requirements in place related to safety, security, and soundness that could prevent you from purchasing a home with an FHA loan. This blog will guide you through the types of homes that qualify for FHA loans, as well as reasons why a home may not be FHA-approved.

FHA Loans

You can use an FHA loan to finance a variety of different property types, from single-family homes, a multifamily home with up to four units, a condo, or a manufactured home.

What types of homes qualify for FHA loans?

Many types of properties are eligible for FHA financing. You can use this loan on several different property types, including single-family homes, a multifamily home with up to four units, condos, and manufactured homes.

You can only use an FHA loan to buy a home you plan to live in as a primary residence. If you’re looking to purchase a vacation home or an investment property, you’ll need to consider another loan type.

What is an FHA loan, and How Can I Qualify?

Manufactured homes

You can use an FHA loan to finance the purchase of a manufactured home, even as a first-time home buyer.

This home loan may require you to have slightly higher credit score than with other FHA-approved property types. To qualify, the manufactured home must have been built on or after June 15, 1976, and it must meet Model Manufactured Home Installation standards and other local and state guidelines. There is also a minimum square footage and the house has to be on a permanent foundation. There are additional requirements and documentation you’ll need to provide if you’re buying a manufactured home and land.


If your home is in need of major work (anything from a new roof to redoing the kitchen), you can ask your lender about applying for an FHA 203(k) rehabilitation loan. FHA 203(k) mortgages allow you to buy and rehab a home you want to use. It’s also available as a refinance loan for a home you’re currently using as your primary residence.

While these loans have no FHA-required FICO score guideline differences than for other loans, your lender may have additional standards or requirements to qualify.

The home will still need to meet basic structural and energy efficiency standards, but the appraiser will look at the home’s suitability after the repairs have been completed.

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While FHA condo loans may have unique requirements, you can purchase a condo unit in an approved condominium project using an FHA loan. Check your applicable condominium’s bylaws and rules carefully to determine whether their condo is right for you.

If you want to buy a condo using an FHA loan, the condominium complex has to appear on the Housing and Urban Development’s (HUD) master list of approved condominium projects. These buildings have already been certified as meeting the FHA’s minimum property eligibility requirements.

Mixed-Use Properties

If the property you’re looking to purchase is primarily zoned residential, and you intend to use it as your primary residence, you may be able to purchase a mixed-use property with an FHA mortgage loan.

You can’t buy an investment property with an FHA loan, but a mixed-use property with at least 51% of the space dedicated to the residence may qualify for the loan type, depending on the lender’s standards.

It’s important to plan and budget for typical home loan costs like appraisal fees, inspections, a down payment, mortgage insurance, and more.

What are the FHA Minimum Property Standards?

The FHA has put minimum property standard requirements in place to protect the lender should the borrower default on the loan. If a borrower stops making mortgage payments, the lender will eventually foreclose and take possession of the house as a way to sell the house and reclaim money owed on the loan.

These minimum property standards also protect the borrower. Apart from being able to live in a fundamentally sound home, they won’t be burdened with expensive home repair bills and maintenance costs. The borrower then may have more of an incentive to make their payments and maintain their home.

What disqualifies a home from being FHA-approved?

In order for a home to be FHA-approved, it must meet certain safety, security, and soundness requirements.

FHA inspections have higher standards than typical home inspections, and the qualification guidelines are updated regularly. Below are several conditions that can disqualify a home from meeting FHA requirements:

  • Limited access to reliably warm water, or drinking water
  • Windows and doors are cracked or off their hinges
  • Handrails and stairs are broken or missing
  • The roof is leaky, or will not last much longer
  • Too close to a hazardous waste site, oil and gas well, or petroleum line
  • Too close to a transmission tower or high-voltage power lines
  • Too close to heavy traffic, an airport, or other noisy areas
  • Lead-based paint in the house
  • There is evidence of mold, decay, or termites
  • Construction is defective or of poor quality
  • Damaged plaster, sheetrock, or other wall and ceiling materials in homes constructed post-1978
  • The heating system is outdated, unsafe, or unable to heat all living spaces
  • Not all of the plumbing works, or there are leaks
  • Inadequate all-weather pedestrian or vehicular driveway
  • No access to front door or rear yard without passing through separate living space
  • Not enough space between neighboring homes
  • Crawl space is too small, inaccessible, or filled with debris/trash
  • Unfinished floors or defective floor finishes
  • Not all bathrooms include a toilet, sink, and shower
  • Rotten or worn-out countertops
  • Tripping hazards in or outside of the home
  • Electrical box has exposed wires
  • Lack of an all-weather driveway surface

What if my home doesn’t pass FHA inspection?

There are some remedies to consider if the property you love did not pass FHA inspection.

First, try asking the seller to make the necessary repairs. A home that doesn’t initially pass an inspection can become approved if improvements are made. If the seller can’t make repairs, you can lower the cost of your offer on the house to make up for paying for the repairs yourself.

Another option is to apply for an FHA 203(k) loan, which allows you to finance both the purchase of a house and the rehabilitation cost through a single mortgage. But, if you’re not interested in dealing with going through the process of making improvements, you may simply continue your search for a better property that can meet FHA standards

What’s next?

FHA loans can be ideal for borrowers of all kinds. They can make homeownership accessible for those who have little cash saved up for a down payment or have imperfect credit history. There are plenty of home types that can be financed using FHA loans.

However, keep in mind that not every home is FHA-approved. If you’re looking to learn more about the process of getting an FHA loan, contact us today and we’ll put you in touch with a knowledgeable loan originator who can talk with you about your specific scenario.

What questions do you have about how homes qualify for FHA loans? Tell us your thoughts on Facebook or Twitter!

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About the Author
David is a Copywriter at Cardinal Financial. After several years working as a multimedia journalist throughout the Southeast, David now enjoys helping highlight what makes Cardinal—and our people—special. When he’s not writing, he can be found immersed in social media, playing soccer, or watching movies. He lives in South Carolina with his wife and 3-year-old toy poodle.