Do I have to buy a HUD or forclosure or can I buy a regular listing on the MLS as long as I am approved for the amount?
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You can buy the house that pleases you so long as it passes the FHA inspection. Shouldn't be a problem because FHA requirements have eased recently – they used to be very picky about some relatively minor items.
If you are buying a condo or townhome, it will have to be on the approved list, or be added to the approved list. Your lender should be able to help you with this. FHA wants to make sure that you are buying a condo/townhome in a complex that is mostly owner occupied.
Excellent luck