Townhomes and Single Family Homes do not need to be on an FHA Approved List to qualify for FHA funding. A condo association (which many "townhomes" actually are) does need to meet certain guidelines. A list of already approved condo associations is here: https://entp.hud.gov/idapp/html/condlook.cfm
If your condo association is not listed on the Approved List, you can attempt to gain "spot approval" (we just got this done on a condo we had listed). The following needs to be true to gain spot approval:
â€¢ The condominium project must be complete. There should be no ongoing or anticipated addition of any units, common elements, and/or facilities.
â€¢ Control of the common areas of the project must have been turned over to the unit owners association for at least one year.
â€¢ The owners association must provide evidence that the project has the appropriate hazard, liability and flood insurance.
â€¢ Individual units in the project must be owned in fee simple or be an eligible leasehold interest. The project's legal documents must provide for undivided ownership of common areas by unit owners. By virtue of this ownership, unit owners must have the right to use all facilities and unrestricted common elements.
â€¢ The project's documents should not place any legal restrictions on conveyance. Any provisions that seek to limit the free transferability of title is generally unacceptable. Such restrictions include rights of first refusal and restrictive covenants. Certain governmental or nonprofit programs designed to assist in the purchase or rental of low- or moderate-income housing are exempted from the restrictions on conveyance provisions.
â€¢ At least 90% of the units in the project must have been sold.
â€¢ At least 51% of the units in the project must be owner-occupied.
â€¢ No single entity may own more than 10% of the units in a project. "Entity" includes an individual partnership, corporation, limited liability company, limited liability partnership, joint venture, investor group or other natural or legal person qualified to hold an interest in real property. The 10% restriction does not apply when the ownership of less than three units would disqualify an otherwise eligible project.
â€¢ HUD recognized that the 10% cap on the number of units that may secure FHA insured mortgages in a given project can place a small regime at a disadvantage, since only a few units will invoke the limit. Accordingly, a two-tiered system was established. For condominium projects having more than 30 units, no more than 10% of the units may have FHA insured loans at any given time. Condominium projects consisting of 30 units or less, can have up to 20% of the units encumbered by FHA insured mortgages under the spot loan rule.
It can get a little confusing :) Let me know if you have any further questions at all and I'd be happy to help!
The approval process is a matter of submitting the required documents to HUD to get approved, if the project is approvable. Refer to the link below for a list of basic criteria for approval with HUD.
Condo Approval Professionals LLC
Since I don't know about your specific development, I can only speak to what I've seen as an appraiser and Realtor. Townhomes do not need to be on the approved list by FHA - condos do. So while your townhome may look like a townhome, it's probably actually a condo.
You can check to see if you association is listed as 'approved' on HUD's list of condos:
It may have been at one point and that's why some people have FHA loans, but then rejected by FHA for some reason now and thus the reason why you can't get an FHA loan on your place. Hope this helps!