FHA Condo Approval Requirements

Posted by Shanna on Apr 1, 2011 in Blog, Real Estate Lending, Selling Real Estate | 0 comments

Here are the latest FHA condo approval requirements for having a condo complex FHA approved.  As I’ve stated in the past, having a condo complex FHA approved is very important for sales within the neighborhood and property values.

FHA Project Eligibility Requirements for Attached Condos:

• no more than 10% of units owned by one entity
• no more than 15% of the units can be 30 days or more delinquent on assessments at time of review
• at least 50% of the total units must be sold prior to endorsement of a mortgage on any unit
• for new construction, pre-sale requirements are reduced to 30% temporarily
• at least 50% of the units must be owner occupied
• vacant or tenant-occupied REO units, may be excluded from calculation of the required owner-occupancy percentage

FHA Loan Concentration:

• normally 30% but temporarily increase to 50%
• can be increased to 100% if:
• project is 100% complete and has been complete for at least one year
• 100% of units are sold and no entity owns more than 10% of the unit in project
• project’s budget provides for funding of replacement reserves for capital expenditures and deferred maintenance in at least 10% of budget
• HOA is control by owners
• owner occupancy ratio is at least 50%

HOA Budget Requirements:

• budget must have reserve funding equaling at least 10% of total income of the project
• adequate funding for insurance coverage and deductibles
• sufficient to maintain and preserve all amenities and features of the project

Insurance Requirements:

• Homeowner Association must carry master blanket policy equal to 100% replacement cost
• comprehensive liability insurance
• fidelity bond/fidelity insurance
• flood insurance if needed
• not subject to litigation

Recent Articles of Interest:
FHA Condo Recertification List
FHA Extends Expiration Dates for Condo Project Approval

Shanna Lafontaine is a Realtor with RE/MAX Affiliates who works the Dublin, Hilliard, Powell, Worthington, Westerville, Delaware and surrounding Columbus areas helping both Buyers and Sellers.